The National Company Law Tribunal (NCLT) has approved a repayment plan for Zee Group founder Subhash Chandra, allowing creditors to receive around Rs 6.5 crore against admitted claims of Rs 22,006.57 crore.
This means, the lenders will face a haircut of nearly 99.97 per cent. Put simply, creditors would recover only about three paise for every Rs 100 they are owed.
The decision has put the spotlight on one of the most striking personal insolvency cases involving a prominent businessman-politician Subhash Chandra.
“The NCLT order sets a wrong precedent. A resolution plan with a haircut in excess of 99 per cent cannot be termed as a “commercial wisdom”. Any decision taken in exercise of commercial wisdom has to be at least make commercial sense,” Abhishek Swaroop, Partner at Saraf and Partners, told NDTV.
Why Rs 6.5 Crore Payout Was Approved
The NCLT’s decision came after a split verdict by two members of the tribunal. The matter was then referred to Nilesh Sharma, a third member appointed by the NCLT president. Sharma approved the repayment plan under Section 114 of the Insolvency and Bankruptcy Code (IBC).
Several lenders had opposed the proposal. LIC Housing Finance, for instance, argued that the recovery offered to it was far too small. Its admitted claim stood at around Rs 1,322.39 crore, while the proposed repayment was only about Rs 38 lakh.
But the lenders opposing the plan represented less than 20 per cent of the voting share. The plan had the support of creditors representing 80.81 per cent of the voting share.
Therefore, the tribunal held that it could not simply replace the commercial decision of the majority of creditors with its own assessment of whether the recovery amount was adequate.
What Happens To The Remaining Rs 22,000 Crore?
The approval does not mean that Rs 22,000 crore will be paid back later under the same plan. The proposed settlement effectively determines what creditors can recover through the insolvency process.
The NCLT noted that an assessment of Chandra’s personal assets showed that their value was considerably lower than the amount offered under the repayment plan.
The tribunal also considered what could happen if the plan failed. If Chandra were pushed into bankruptcy, creditors could potentially end up recovering even less from his financial assets.
In other words, the tribunal’s question was not simply whether Rs 6.5 crore was a small amount compared with Rs 22,006 crore. It was whether rejecting the plan would leave creditors in a better position.
The tribunal concluded that it was unlikely to do so.
How Did Subhash Chandra’s Insolvency Case Begin?
The roots of the case go back to a loan taken by Vivek Infracon. Chandra had provided a personal guarantee for a Rs 170-crore loan. When the loan went bad, Indiabulls Housing Finance moved against Chandra.
The lender filed the insolvency case in 2022. The NCLT later admitted the personal insolvency proceedings against Chandra in April 2024.
Indiabulls Housing Finance, meanwhile, was renamed Sammaan Capital in 2024. There was an earlier attempt to settle the matter. But that settlement did not ultimately materialise.
After the Supreme Court upheld the relevant provisions of the IBC in November 2023, the insolvency proceedings were revived in February 2024.
For lenders, the issue was straightforward. They had admitted claims worth Rs 22,006.57 crore. The repayment plan offered only Rs 6.5 crore.
LIC Housing Finance called the proposal “unviable and unlawful”, according to the NCLT order. Its argument was that receiving roughly Rs 38 lakh against a claim of more than Rs 1,322 crore amounted to an almost negligible recovery.
Other creditors also questioned the proposal because the Rs 6.5 crore figure was described in the plan as indicative rather than final. The tribunal, however, noted that the creditors who voted in favour of the plan had a clear majority.
Under the IBC framework, that commercial decision carries considerable weight. “NCLTs are not powerless to accept any ex-facie arbitrary decision and fully empowered to set aside the same. This will have a ripple effect in other pending resolution in personal insolvency regime,” added Swaroop.
What The NCLT Actually Decided
The ruling is important because the tribunal made clear that its role is not to decide what amount would be commercially ideal for creditors. Its role is supervisory.
The NCLT said it cannot substitute its own commercial judgment for that of creditors, provided their decision operates within the legal framework. Once the repayment plan is approved, it will apply to all creditors covered under the insolvency process, including those who opposed it.
The case will now return to the original division bench, which is expected to issue the formal order reflecting the majority view.
For Subhash Chandra, the NCLT’s approval brings a major step in his personal insolvency proceedings. For lenders, however, the numbers tell a much harsher story. Against every Rs 100 claimed, the approved plan offers only around three paise.
About the Author
