6 days ago
NCLT Clears Subhash Chandra’s ₹6.5 Crore Settlement Plan
A tribunal approved a plan for businessman Subhash Chandra to pay creditors about ₹6.5 crore.
The creditors’ admitted claims were about ₹22,006.57 crore.
That means they may recover only a very small part of the money they said was owed.
Some lenders, including LIC Housing Finance, objected to the plan.
They said the payment was too small and was not guaranteed.
Most voting creditors, however, supported the plan with 80.81% approval.
The tribunal said Chandra’s personal assets were worth less than the proposed payment.
It also said rejecting the plan could result in bankruptcy and might not help creditors recover more.
Congress criticised the decision and compared the reduction to a “mundan,” meaning complete shaving of the head.
The NCLT approved Subhash Chandra’s plan to pay about ₹6.5 crore against admitted claims of ₹22,006.57 crore.
The proposed recovery equals roughly 0.028% of lenders’ claims, implying a loss of nearly 99.97%.
LIC Housing Finance and other dissenting creditors called the payout unviable, unlawful and uncertain because it was described as indicative.
The plan received 80.81% creditor approval, while objecting lenders held less than 20% of voting share.
Congress leaders called the outcome a “mundan,” while Chandra said his personal-insolvency claim was ₹3,992 crore and that he was a guarantor, not a borrower.
- Who
- Subhash Chandra, his creditors including LIC Housing Finance, the National Company Law Tribunal, and Congress leaders Jairam Ramesh, Rahul Gandhi and Randeep Singh Surjewala.
- What
- The NCLT approved a personal-insolvency resolution plan proposing about ₹6.5 crore in payments against admitted claims of approximately ₹22,006.57 crore.
- Where
- Before the National Company Law Tribunal in India.
- When
- The plan was approved on a Tuesday; one report identifies the approval date as 25 August. Congress reactions were reported on Thursday.
- Why
- The tribunal said the plan had the required creditor approval, Chandra’s personal estate was worth less than the offered amount, and creditors were unlikely to recover more through bankruptcy.
Creditors and Congress Critics
NCLT and Plan Supporters
Adequacy of repayment
Creditors and Congress Critics
Dissenting lenders led by LIC Housing Finance argued that paying about ₹6.5 crore against ₹22,006.57 crore was too little to justify approval and was unviable and unlawful. Congress called the reduction a “mundan” and a mockery of the Insolvency and Bankruptcy Code.
NCLT and Plan Supporters
The NCLT said it could not replace the creditors’ commercial judgment or independently determine whether the settlement amount was adequate. The plan had received 80.81% approval.
Certainty of payment
Creditors and Congress Critics
Objecting creditors said the plan’s description of ₹6.5 crore as an indicative rather than guaranteed amount made it tentative, uncertain and unsuitable for approval.
NCLT and Plan Supporters
The third-member NCLT approved the plan under Section 114 of the Insolvency and Bankruptcy Code after resolving a split decision by the original two-member bench.
Likely recovery
Creditors and Congress Critics
Critics argued that lenders and shareholders would bear an almost 100% loss and questioned why insolvency proceedings should continue under such circumstances.
NCLT and Plan Supporters
The tribunal said Chandra’s personal assets were worth considerably less than the proposed payment and that bankruptcy might leave creditors less likely to recover more. It said resolving the insolvency could ultimately improve recovery prospects from the principal debtors.
Key facts
- Admitted claims
- Approximately ₹22,006.57 crore
- Proposed payment
- ₹6.25 crore for eligible creditors plus ₹25 lakh for insolvency-process costs, totaling about ₹6.5 crore
- Estimated recovery
- Approximately 0.028% of admitted claims
- Estimated loss
- Nearly 99.97%, or almost ₹22,000 crore
- Creditor vote
- The plan received 80.81% approval; objecting creditors held less than 20% of voting share
- LIC Housing Finance claim
- ₹1,322.39 crore admitted, with a proposed repayment of ₹38,09,294
- Proceeding background
- Indiabulls Housing Finance initiated insolvency proceedings against Chandra in 2022 after a personally guaranteed ₹170 crore loan to Vivek Infracon became bad
Quotes
An anonymous social-media user
Social-media user reacting to the settlement
“Mundan is definitely more apt. Not a laughing matter though. Farmers commit suicide over their debt issues, and goons are sent for recovery from ordinary defaulters, while dozens of rich bigwigs are gifted with a salon treatment.”
livemint.com
“How can you have haircuts of 50 per cent, 60 per cent, 70 per cent, 80 per cent, 90 per cent, now 99 per cent? Then why are you having NCLT proceedings? This is loan waiver of industrialists in garb of haircuts.”
telegraphindia.com
National Company Law Tribunal
Tribunal expressing its reasoning for approving the repayment plan
“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.”
deccanchronicle.com
livemint.com
Sources
Media Baron Subhash Chandra to Pay Rs 6.5 Cr to Settle Rs 22K Cr Dues, Congress Hits Out
‘Complete mockery’: Congress slams Subhash Chandra’s 0.028% NCLT settlement plan; social media reacts
‘Neta-Company Loot Tribunal’: Congress targets NCLT over Subhash Chandra’s Rs 6.5 crpre settlement
Subhash Chandra's ₹6.5 cr payout to settle dues cleared by NCLT; Congress calls it ‘mundan’: Key things to know
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