Subhash Chandra Case: Rs 22,000 Cr Is Not Bank Loan Write-Off, Sources on NCLT Order

New Delhi: The National Company Law Tribunal’s approval of a repayment plan for Essel Group founder Subhash Chandra does not mean banks have written off 99.97 per cent of Rs 22,000 crore in loans, sources said, citing the insolvency court’s order.

The Rs 22,006 crore figure represents claims admitted against Chandra in his capacity as a personal guarantor for loans taken by several Essel/Zee-linked companies, not debt personally borrowed by him, they said.

The distinction is critical to understanding the NCLT order. The plan provides for recovery of about Rs 6.25 crore from Chandra’s personal estate, but the principal corporate borrowers remain liable for their debts and the repayment plan envisages about Rs 1,494 crore in payments by those borrowers, apart from Chandra’s personal contribution, they said.

Only about Rs 2,574 crore of the admitted claims relate to loans for which Chandra’s personal guarantee was provided at the time of the original borrowing, according to the facts outlined in response to the reports. Most of the other guarantees were furnished later as additional security.

The reported 99.97 per cent “haircut” therefore relates specifically to the amount recoverable from Chandra as a personal guarantor, rather than a 99.97 per cent loss on Rs 22,006 crore of bank loans.

The insolvency proceedings against Chandra arose after he had provided a personal guarantee for a loan to Vivek Infracon from Indiabulls. Following the default, creditors initiated insolvency proceedings against him in his capacity as guarantor.

Sources said the approved repayment plan was backed by 80.81 per cent of creditors by voting share. Several lenders, including LIC Housing Finance, HDFC Bank, Axis Bank, Canara Bank, RBL Bank and Union Bank, opposed the plan, but the NCLT held that their objections were insufficient to overturn the creditor-approved resolution.

Creditors also retain recovery avenues against the principal borrowers, securities and other available assets of the companies.

The relatively low personal recovery was contested by creditors, who cited historical net-worth certificates showing Chandra’s net worth at about Rs 45,888 crore in 2017 and Rs 40,562 crore in 2018, compared with a presently disclosed net worth of around Rs 31.79 crore. They sought deeper scrutiny of his assets.

Chandra’s statement has also claimed that the companies have so far paid about Rs 43,000 crore to creditors.

The case is therefore a resolution of Chandra’s personal-guarantor liability and should not be characterised as a settlement or write-off of the entire debt owed by the underlying Essel/Zee-linked companies, they said.

The Chandra case is an exceptional personal-guarantor resolution and is not representative of corporate insolvency recoveries under the Insolvency and Bankruptcy Code, according to the data cited in the response.

Creditors have recovered about Rs 4.32 lakh crore through approved resolution plans up to March 2026, with recoveries amounting to 116.85 per cent of liquidation value and 94.56 per cent of fair value.

More than 32,000 cases have been settled before admission into insolvency proceedings since the IBC was introduced, involving assets worth about Rs 14 lakh crore. Such settlements reflect the deterrent effect of the law, with borrowers settling cases after an insolvency application was filed but before formal admission.

The net non-performing assets of scheduled commercial banks have meanwhile fallen 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.

Citing an IIM Ahmedabad study, sources said 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.

The figures underscore why the Chandra case needs to be distinguished from the broader record of corporate insolvency resolution: the Rs 6.25 crore personal recovery relates to one guarantor’s assets, while creditors’ claims against the underlying companies and their securities continue separately.

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