NCLT clears Subhash Chandra's ₹6.5 cr payout against ₹22,006 cr claims

The National Company Law Tribunal (NCLT) has approved a repayment plan for Zee Group Founder and Chairman Subhash Chandra under which creditors will receive only ₹6.5 crore against admitted claims of around ₹22,006.57 crore. This amounts to a haircut of nearly 99.97 per cent for lenders, news agency PTI reported. NCLT Member (Judicial) Nilesh Sharma, acting as the third member of the tribunal, approved the plan under Section 114 of the Insolvency and Bankruptcy Code (IBC) on Tuesday. He rejected objections from lenders who argued that the proposed recovery was too small to justify approval. Tribunal rejects lenders' objections The case had earlier resulted in a split decision between two NCLT members. Following the disagreement, the president of the tribunal appointed Sharma as the third member to decide the matter. Sharma rejected objections led by LIC Housing Finance, which described the proposed payout as "unviable and unlawful". The lender had pointed out that against admitted claims of about ₹22,006.57 crore, the plan offered ₹6.25 crore to creditors and ₹25 lakh towards process costs. "In the case of LICHFL, whose admitted claim stood at ₹1,322.39 crore, the proposed repayment was merely ₹38,09,294, amounting to approximately 0.028 per cent of its admitted dues. It was contended that such a negligible repayment could not receive the approval of this tribunal," said the NCLT order recording its submission. The creditors also argued that the plan itself described the ₹6.5 crore amount as indicative rather than final, making the proposal uncertain and unsuitable for approval. However, the tribunal noted that the objecting creditors together accounted for less than 20 per cent of the voting share. The repayment plan had received approval from creditors holding 80.81 per cent of the voting share. NCLT says creditors could recover more later In its 144-page order, the tribunal said the valuation carried out by the resolution professional showed that Chandra's personal assets were worth considerably less than the amount offered under the repayment plan. It also held that rejecting the plan was unlikely to improve the position of dissenting creditors. If the plan failed, Chandra could face bankruptcy, reducing the possibility of recovering dues from his financial assets. The tribunal said it could not replace the commercial judgment of the creditors with its own assessment of whether the settlement amount was sufficient. It also noted that "the commercial decision of the creditors operates within, and not outside, the statutory framework". "The AA (NCLT) neither substitutes its own commercial wisdom for that of the creditors nor does it conduct a wide-ranging investigation into allegations that are unsupported by reliable material. Its role is supervisory, corrective and judicial, not investigative unless the statute so requires," the NCLT said. The NCLT further clarified that once approved, the repayment plan would apply to all creditors under Section 115 of the IBC, including those who opposed it. The case will now return to the original division bench, which will issue a formal order in accordance with the majority view under Section 419 (5) of the Companies Act, 2013. What is the case about? The insolvency proceedings began after Indiabulls Housing Finance filed a case in 2022 against Chandra, who had given a personal guarantee for a ₹170-crore loan to Vivek Infracon that later turned bad. In April 2024, the NCLT admitted the personal insolvency plea. Indiabulls Housing Finance Ltd was renamed Sammaan Capital Ltd in 2024. Chandra had earlier argued that the NCLT did not have the authority to decide an individual's insolvency. The tribunal rejected the argument in May 2022 and appointed a resolution professional. Chandra challenged the decision before the NCLAT, but the matter was closed after Indiabulls said a settlement had been reached. The settlement, however, did not materialise. After the Supreme Court upheld the relevant IBC provisions in November 2023, Indiabulls revived the insolvency case in February 2024. (With agency inputs)