NCLT Approves Subhash Chandra’s ₹6.25 Cr Repayment Plan, Lenders Appeal

The National Company Law Tribunal (NCLT) has approved a personal repayment plan for Essel Group chairman Subhash Chandra, allowing him to settle claims of approximately ₹22,006.57 crore by paying just ₹6.25 crore. This decision represents a significant 99.97% haircut for creditors and has prompted several lenders to challenge the ruling.

Key details of the approved plan and its immediate impact include:

• Admitted claims against Chandra: ₹22,006.57 crore
• Approved repayment amount: ₹6.25 crore
• Resulting haircut for creditors: 99.97%
• Lenders appealing the decision: Union Bank of India, HDFC Bank, and LIC Housing Finance

Lenders are appealing to the National Company Law Appellate Tribunal (NCLAT), arguing that the approved plan fundamentally undermines the concept of a personal guarantee. They contend that such a drastic reduction in repayment effectively negates the purpose of personal guarantees in corporate debt structures.

Public Dispute Erupts Over Debt Reporting

Following the NCLT’s decision, a public dispute emerged between Subhash Chandra and Reliance Industries, led by Mukesh Ambani. Chandra accused Reliance’s media network, specifically CNBC-TV18, of misreporting the ₹22,000-crore figure.

He clarified that his exposure stemmed solely from personal guarantees for Essel Group companies, not personal loans, and stated that a significant portion of the debt had already been repaid by the borrowing entities. Reliance Industries subsequently issued a denial, asserting that its media entities are not used to attack any individual.

Understanding India’s Personal Guarantor Framework

The case highlights complexities within India’s personal guarantor insolvency framework. Supreme Court rulings have consistently upheld the enforceability of personal guarantees, even after a corporate debtor’s resolution plan is in place.

A notable discrepancy in asset valuation has also surfaced, raising questions about bank assessments. Chandra’s 2016 parliamentary asset declaration listed ₹39.08 crore, yet a 2017 bank-certified net worth was recorded at ₹45,888 crore.

This situation draws comparisons to cases like Vijay Mallya’s, leading to observations about a perceived double standard in how different guarantors are treated. The public exchange between Chandra and Ambani, primarily through press statements, illustrates a modern approach prominent business figures use to address a wider audience.

The core issues surrounding guarantees, valuations, and outstanding debts remain unresolved. These matters are now expected to be contested further at the NCLAT, shaping the future interpretation of personal insolvency laws in India.