The National Company Law Tribunal (NCLT) has approved a personal insolvency resolution plan for Essel Group founder Subhash Chandra, allowing him to settle admitted creditor claims of approximately ₹22,006 crore for a total payment of ₹6.5 crore. This decision results in a haircut of nearly 99.97% for the lenders involved. The plan received the required majority support from creditors, but several major financial institutions have expressed strong objections and are considering appeals.
According to The Indian Express, LIC Housing Finance Limited (LICHFL) had an admitted claim of ₹1,322.39 crore in the insolvency proceedings against Subhash Chandra. Under the approved plan, LICHFL is set to receive only ₹38.09 lakh. LICHFL stated that it continues to retain all rights over the secured assets and is exploring further legal remedies, clarifying that the NCLT order does not impact the corporate liabilities of the principal borrower entities.
As reported by The Hindu, HDFC Bank, another major creditor, has announced plans to appeal the NCLT order at the National Company Law Appellate Tribunal (NCLAT). The bank’s admitted claim was approximately ₹705 crore, representing 3.2% of the total claims. HDFC Bank inherited this exposure from the erstwhile HDFC Ltd and had opposed the resolution plan during creditor voting.
Further reporting indicated that the NCLT’s approval came after a split verdict by a two-member bench, with the third judicial member, Nilesh Sharma, acting as the tiebreaker. The plan, which includes ₹6.25 crore to be paid to creditors and ₹25 lakh for insolvency process costs, received 80.81% support by value from creditors. Dissenting creditors, including HDFC Bank, LIC Housing Finance, Axis Bank, Canara Bank, RBL Bank, and Union Bank, opposed the plan, citing the negligible recovery.
In its coverage, Deccan Herald noted that the NCLT order resulted in a 99.97% haircut for lenders. The tribunal’s decision was based on the assessment that Chandra’s personal estate was worth significantly less than the admitted claims, and that creditors were unlikely to recover more through bankruptcy proceedings. The tribunal emphasised that its role was not to substitute its own commercial wisdom for that of the creditors.
“If the plan is approved and the debtor’s insolvency is resolved, putting him back on his feet, the objectors would ultimately stand a better chance of recovering their debts directly from the Principal Debtors,” the NCLT observed.
Additional analysis showed that the proceedings concern personal guarantees given by Subhash Chandra for borrowings of Essel Group-linked companies. The NCLT concluded that the approved repayment plan could yield a better outcome than forcing the matter into bankruptcy, as the value of Chandra’s legally available assets was limited. The plan’s approval prevents the case from entering bankruptcy, which could have resulted in even lower recoveries for creditors.
Political reactions have also emerged as details emerged about the settlement. Congress leader Rahul Gandhi criticised the government, alleging the existence of “two systems” in the country—one for billionaires and another for ordinary citizens. Other Congress leaders described the settlement as a “mockery” of the Insolvency and Bankruptcy Code, with calls for greater transparency regarding the total losses banks have incurred through such haircuts.
Congress general secretary Jairam Ramesh stated, “In finance terminology, when creditors are owed money and the debtor repays only part of it, the difference expressed as a percentage is called a haircut.”
Chandra’s office clarified that the insolvency case pertains only to personal guarantees and not to direct personal borrowings. The borrowing entities for which he had provided guarantees have reportedly repaid a significant portion of their debts, and the plan is based on Chandra’s declared net worth and available assets. The NCLT’s decision remains subject to further directions from the regular bench and potential appeals by dissenting creditors.
Note: This article is produced using AI-assisted tools and is based on publicly available information. It has been reviewed by The Quint's editorial team before publishing.