The National Company Law Appellate Tribunal (NCLAT) has agreed to hear an urgent challenge filed by creditors against the Delhi bench of the National Company Law Tribunal’s (NCLT) decision to approve Essel Group Chairman and Zee Group founder Subhash Chandra’s personal debt repayment plan.
Creditors Oppose ₹6.5 Crore Resolution
Financial institutions, including HDFC Bank, Axis Bank, Canara Bank, RBL Bank, and Union Bank of India, have voiced strong opposition to the NCLT's approval. The proposed repayment plan involves a total payout of ₹6.5 crore, with ₹6.25 crore designated for distribution among creditors and ₹25 lakh earmarked for insolvency process costs.
Solicitor General Tushar Mehta, representing the creditors, successfully pressed the appellate tribunal for an immediate hearing, which has been scheduled for Tuesday morning. HDFC Bank, expecting to recover only about 3.2% of its total claim under this structure, had previously considered an appeal before the collective challenge was mounted.
NCLT Approval and Judicial Observation
The NCLT's approval came after Nilesh Sharma, a judicial member, cleared the proposal. Sharma observed that creditors had actively participated in the proceedings without establishing sufficient prejudice. He further argued that the tribunal should not substitute its commercial judgment for a decision supported by a majority of creditors. However, Sharma's stance awaits formalization into a final order, as the matter remains pending before the regular bench for final directions.
Understanding Subhash Chandra's Personal Guarantees
Government sources have clarified that these personal insolvency proceedings do not stem from direct loans taken by Subhash Chandra personally. Instead, the proceedings were triggered by personal guarantees he extended for loans secured by various Essel and Zee-linked entities. Of the total outstanding debt, approximately ₹2,574 crore relates to claims where Chandra provided personal guarantees at the initial loan disbursement, with subsequent guarantees serving as secondary security.
The NCLAT's decision to hear the creditors' challenge marks a significant development in the ongoing efforts to resolve Subhash Chandra's debt, potentially impacting how similar personal guarantee cases are handled in India.