The National Company Law Tribunal (NCLT) has suspended its previous order that permitted Zee Group founder Subhash Chandra to address his personal insolvency by paying Rs 6.25 crore, which is against accepted claims amounting to Rs 22,006.57 crore. A special five-member bench adjudicated on this matter on Tuesday, deciding to stay the implementation of the order made on August 25. As part of this decision, Chandra has been directed not to sell any personal assets, either directly or indirectly.

This recent order indicates a significant pause in the repayment strategy which seemed poised to facilitate the conclusion of Chandra’s insolvency proceedings. The NCLT found it necessary to reassess the case after it identified that no clear consensus had emerged from previous hearings. Notices have been issued to all involved parties as the tribunal prepares to revisit the details of the case.

Background of the Insolvency Proceedings

The insolvency proceedings against Chandra were initiated by Indiabulls Housing Finance under Section 95 of the Insolvency and Bankruptcy Code (IBC). Chandra’s proposed repayment plan, which aimed to settle Rs 6.25 crore, was juxtaposed against the staggering Rs 22,006.57 crore in claims put forth by various creditors. An additional Rs 25 lakh was allocated to cover the associated insolvency costs.

The plan attracted scrutiny due to the stark contrast between the proposed payment and the claims, suggesting that creditors would receive merely a fraction of their recognized debts. Originally, a two-member bench of the NCLT explored these issues, but their divergent opinions on the repayment plan necessitated the involvement of an additional member, following a directive from the Companies Act.

On August 25, this third member determined that the repayment plan should proceed, although it notably excluded claims submitted by Anil Kumar on behalf of 960 individuals and Sunil Jain on behalf of 300 individuals. Consequently, the amounts tied to those claims were to be redistributed among other creditors. However, following further examination, the two-member bench on August 31 asserted that a majority view was not discernible from the differing opinions articulated in the previous rulings, prompting a referral to the newly constituted five-member panel.

Clarification on the Claims Against Chandra

The figure of Rs 22,006.57 crore pertains to claims associated with Chandra’s personal guarantees related to loans taken by entities linked to the Essel Group. Chandra has publicly asserted that he did not personally borrow this substantial amount; instead, it reflects guarantees he offered for loans acquired by these companies. Following the NCLT’s directives, Chandra’s office reiterated that while his total guarantees amounted to Rs 22,000 crore, this should not be construed as his personal debt.

Chandra further explained that when the financial challenges of the Essel Group surfaced in 2019, the liabilities stood at approximately Rs 45,000 crore. He claimed that around Rs 43,000 crore of that sum has since been repaid, indicating that efforts have been made to fulfil these obligations. Additionally, assets owned by Chandra’s family, including their residence, have been liquidated as part of these repayment efforts.

The five-member NCLT bench will now methodically reevaluate the insolvency proceedings. At present, the order from August 25 approving the Rs 6.25 crore payment plan is on hold, while Chandra has been barred from divesting any of his properties while the tribunal’s examination continues. Notices have been circulated to all relevant parties, and the current order does not yet finalise the fate of the repayment plan; it is a matter that will be deliberated upon in future sessions of the special bench.

Long or Short, get news the way you like. No ads. No redirections. Download Newspin and Stay Alert, The CSR Journal Mobile app, for fast, crisp, clean updates!

App Store –  https://apps.apple.com/in/app/newspin/id6746449540 

Google Play Store – https://play.google.com/store/apps/details?id=com.inventifweb.newspin&pcampaignid=web_share