The NCLT has referred the personal insolvency case of media mogul Subhash Chandra back to the Chairperson after a deadlock over a controversial repayment plan. Lenders are protesting a massive 99.97% haircut on a debt exceeding ₹22,000 crore.
- Controversy over a proposal to settle ₹22,000 crore debt with just ₹6.5 crore.
- Lenders strongly oppose the massive 99.97% 'haircut' proposed in the plan.
- NCLT bench referred the matter to the Chairperson due to lack of majority consensus.
- Solicitor General Tushar Mehta demanded urgent hearing on behalf of major banks.
The personal insolvency proceedings against media tycoon and Essel Group Chairman Subhash Chandra have hit a significant legal roadblock. A bench of the National Company Law Tribunal (NCLT) on Monday decided to refer the case back to the Tribunal Chairperson for fresh hearings, citing a lack of majority consensus on the proposed repayment plan.
The core of the dispute lies in the staggering disparity between the approved claims and the offered settlement. While the total claims against Chandra exceed ₹22,006.57 crore, the proposed repayment plan suggests a payment of merely ₹6.5 crore. This represents a 99.97% 'haircut', a move that has sparked outrage among the financial creditors.
The Legal Deadlock
The case saw conflicting views within the tribunal. Judicial Member Ashok Kumar Bhardwaj and Technical Member Reena Sinha Puri had initially deliberated on the plan before referring it to a third member. The third member, Sharad Kumar Sharma, approved the plan and applied Section 115(1) of the code uniformly, effectively extinguishing the claims of all creditors, including those who dissented.
Why This Matters
BozokMedia analysis shows that this case serves as a litmus test for the Insolvency and Bankruptcy Code (IBC) in India. If such an extreme haircut is sanctioned, it could set a perilous precedent, encouraging high-net-worth individuals to seek nearly total debt waivers, thereby undermining the stability of the banking sector.
"Allowing such a disproportionate haircut defeats the very essence of the bankruptcy code, which is to maximize the value of assets for creditors."
Representing major lenders including Canara Bank, Union Bank, and LIC Housing Finance, Solicitor General Tushar Mehta argued that allowing such an order to stand would be detrimental to the financial ecosystem. The NCLT has agreed to hear the matter further to resolve the conflict between the members' opinions.
| Detail | Proposed Amount | Total Claim Amount |
|---|---|---|
| Repayment Amount | ₹6.5 Crore | ₹22,006.57 Crore |
| Haircut Percentage | 99.97% | - |
Frequently Asked Questions
1. What does the 99.97% haircut mean in this case?
It means the proposal suggests that creditors should accept only ₹6.5 crore as a full and final settlement for a debt of over ₹22,000 crore, forgiving the rest.
2. Why was the case sent back to the NCLT Chairperson?
The case was referred back because the three members of the bench did not reach a majority agreement on whether the repayment plan should be approved for all or only for consenting creditors.
