New Delhi, Aug. 27 -- The National Company Law Tribunal's approval of a repayment plan for Essel Group founder Subhash Chandra has triggered criticism from lenders and the Congress, with HDFC Bank saying it is considering an appeal, while Chandra maintained that the proceedings concern only his liability as a personal guarantor and not debt personally borrowed by him.
The NCLT approved a plan under which creditors will receive about Rs 6.25 crore, with another Rs 25 lakh earmarked for process costs. The figure has been described publicly as a Rs 6.5 crore payout against admitted claims of about Rs 22,006.57 crore, implying a recovery of roughly 0.03 per cent from Chandra's personal estate and a 99.97 per cent haircut on those claims.
Chandra disputed the characterisation of the claims, saying the total claim against him as a personal guarantor in the personal insolvency proceedings is Rs 3,992 crore. "I have not borrowed any money from any lender," he said. According to his statement, Rs 620 crore of the claims has already been settled and borrowing entities have offered another Rs 1,063 crore. Those entities, he said, have so far repaid about Rs 43,000 crore to creditors and have assured that any remaining amount will also be settled.
The distinction is important because the Rs 22,006 crore figure represents claims admitted against Chandra as a personal guarantor for loans linked to Essel and Zee companies, rather than money borrowed by him directly. About Rs 2,574 crore relates to loans for which his personal guarantee was provided when the original borrowing took place, while many other guarantees were subsequently given as additional security.
The case began after Vivek Infracon defaulted on a Rs 170 crore loan from the then Indiabulls Housing Finance, for which Chandra had provided a personal guarantee. The default led to insolvency proceedings against him as guarantor and prompted claims from several other lenders.
The plan received 80.81 per cent of the creditors' voting share. LIC Housing Finance, HDFC Bank, Axis Bank, Canara Bank, RBL Bank and Union Bank were among lenders opposing it. LIC Housing Finance had described the payout as "unviable and unlawful".
The matter reached a third member after two NCLT members delivered a split verdict. NCLT member (judicial) Nilesh Sharma, in a 144-page order, rejected the objections. He said the resolution professional's valuation showed Chandra's personal estate was worth significantly less than the amount proposed under the plan. Rejecting the plan, he said, could leave Chandra facing bankruptcy and reduce the prospects of recovery.
The tribunal said creditors could continue pursuing the principal borrowers, securities and other assets. It also held that its role was not to replace the commercial judgment of creditors or decide whether the settlement amount was adequate.
HDFC Bank, whose total claim was Rs 680 crore, said only 3.2 per cent of its claim was admitted under the order. The bank said it had voted against the plan and was "exploring filing an appeal" before the National Company Law Appellate Tribunal. It inherited the loan facility from HDFC before the merger of the two banks.
The Congress attacked the decision, with Rahul Gandhi calling the NCLT "Neta-Company Loot Tribunal". Congress leaders Jairam Ramesh and Randeep Singh Surjewala described the recovery as an extreme "haircut" and questioned the functioning of the insolvency process.
Creditors had also pointed to Chandra's historical net worth of about Rs 45,888 crore in 2017 and Rs 40,562 crore in 2018, compared with a presently disclosed figure of around Rs 31.79 crore, seeking greater scrutiny of his assets. The Chandra case is separate from the broader corporate insolvency record. Up to March 2026, approved resolution plans had yielded about Rs 4.32 lakh crore in recoveries, equal to 116.85 per cent of liquidation value and 94.56 per cent of fair value. More than 32,000 cases involving assets worth about Rs 14 lakh crore were settled before admission to insolvency proceedings.
Scheduled commercial banks' net non-performing assets also fell from 5.94 per cent in March 2018 to 0.48 per cent in September 2025, while the absolute amount declined from about Rs 5.2 lakh crore to Rs 94,000 crore. An IIM Ahmedabad study cited in the response found that companies resolved through insolvency recorded 76 per cent growth in sales, 50 per cent growth in total assets, 50 per cent growth in employee expenses and 130 per cent growth in capital expenditure.
Published by HT Digital Content Services with permission from Millennium Post.