NCLAT to Hear Lenders’ Challenge to Subhash Chandra’s Repayment Plan
By Business Desk
NCLAT will review lenders’ challenge to Subhash Chandra’s repayment plan, questioning the NCLT’s approval of a settlement that significantly undervalues admitted claims.
The National Company Law Appellate Tribunal (NCLAT) is scheduled to review an urgent appeal from several financial institutions regarding the repayment plan of Essel Group founder Subhash Chandra. This challenge targets the National Company Law Tribunal’s (NCLT) approval of a settlement that significantly undervalues admitted claims.
Lenders, including LIC Housing Finance, HDFC Bank, and Union Bank of India, seek to overturn the NCLT’s decision, which permits Chandra to resolve substantial admitted claims with a minimal payment. The Solicitor General, Tushar Mehta, representing these lenders, emphasized that upholding such findings could undermine the core objectives of the Insolvency and Bankruptcy Code (IBC).
Key Figures in the Repayment Dispute
- Admitted claims total approximately Rs 22,006.57 crore.
- Chandra’s proposed payment is Rs 6.25 crore, plus Rs 25 lakh for the insolvency process.
- This settlement implies a recovery rate of about 0.03% for creditors.
- The projected shortfall for creditors stands at nearly 99.97%.
Despite significant opposition from various creditors, Chandra’s proposal garnered 80.81% support from the committee of creditors. A central focus for the NCLAT’s hearing will be the voting eligibility of certain financial creditors.
Contention Over Creditor Voting Eligibility
Dissenting lenders argue that some entities casting votes in favor of the plan are linked to Chandra or his family. These entities were crucial in securing the plan’s approval.
- Veena Investments
- Direct Media Distribution Ventures
- World Crest Advisors
- Lemonade Capital Advisors
- Corpcall Capital Advisors
LIC Housing Finance has also voiced concerns regarding the absence of a forensic audit into Chandra’s financial status. They note an anticipated recovery of only about Rs 38 lakh from an admitted claim of roughly Rs 1,322 crore.
Origin of Insolvency and Chandra’s Disputed Claims
The insolvency proceedings against Chandra commenced in 2022, initiated by Indiabulls Housing Finance under Section 95 of the IBC. These proceedings pertain to a personal guarantee Chandra provided for a corporate borrowing, distinguishing it from direct borrowing of the entire amount.
Chandra disputes the Rs 22,000 crore figure, asserting his personal guarantor claims were closer to Rs 3,992 crore. His office further contends that many underlying borrowers have already made substantial repayments, suggesting remaining liabilities should be recovered from the borrowing companies, not treated as his personal debt.
NCLT Approval and Broader Implications
The repayment plan received NCLT approval on August 25, 2026, by Nilesh Sharma, an additional judicial member, following a split opinion on the original NCLT Bench. This decision has since faced challenges from both private and public-sector lenders.
The NCLAT’s upcoming hearing will critically examine both the recovery amount and the integrity of the voting process. Lenders argue that the NCLT’s decision could significantly impact the personal-guarantee insolvency framework under the IBC, setting a concerning precedent.