Subhash Chandra case effect? IBBI proposes 4 insolvency changes that could impact companies
The IBBI has proposed four changes to the personal guarantor insolvency process after the Subhash Chandra repayment plan drew scrutiny.
- Sep 15, 2026,
- Updated Sep 15, 2026 10:32 AM IST
A repayment plan by media baron Subhash Chandra that offered creditors ₹6.25 crore against admitted claims of ₹22,006.57 crore has drawn fresh attention to India’s personal insolvency framework. In response, the Insolvency and Bankruptcy Board of India has proposed four amendments to tighten safeguards in insolvency resolution processes for personal guarantors to corporate debtors, The Indian Express reported.
In a discussion paper issued for public comments till October 3, the IBBI said the changes are aimed at “giving banks and other creditors protections similar to those available under the corporate insolvency resolution process for companies”.
Four changes proposed
The proposals cover four areas: voting rights of related-party creditors, scrutiny of avoidance transactions during the resolution stage, mandatory valuation of the personal guarantor’s assets, and fuller recording of creditors’ objections and reasons while considering a repayment plan.
Under the first proposal, a creditor that is a related party of the guarantor would not be allowed to vote on the repayment plan. At present, an associate is barred from voting in such cases, but the IBBI said the definition of associate is narrower than that of related party. According to the paper, this gap can “allow entities acting under the guarantor’s influence to participate in voting”.
The second proposal requires the resolution professional to examine, during the resolution process itself, whether the guarantor was involved in avoidance transactions such as undervalued transactions, preference transactions and extortionate credit transactions. The findings would have to be shared with creditors before voting, and legal proceedings would need creditor approval.
The third proposal makes valuation of the guarantor’s assets compulsory. A registered valuer would be appointed to determine the fair value and realisable value of the assets, and the report would be placed before creditors along with the repayment plan.
The fourth proposal seeks more detailed records of creditor decision-making. The IBBI said the minutes should capture deliberations, objections and reasons, especially when the amount offered under a plan is “far below admitted claims or the estimated realisable value of assets”.
Subhash Chandra case in focus
The proposals come amid developments in the insolvency case involving Essel Group founder Subhash Chandra. On August 25, an NCLT single bench approved a repayment plan under which creditors were offered Rs 6.25 crore against admitted claims of Rs 22,006.57 crore. The order sparked debate over the effectiveness of the Insolvency and Bankruptcy Code.
Banks alleged that certain non-bank entities were associates or related parties of the guarantor and acted under his influence to push through the plan despite the steep haircut. On September 1, a five-member bench of the Tribunal stayed the August 25 order and barred Chandra from alienating his assets. Chandra has challenged the constitution of the five-member bench, arguing that the Tribunal does not have such a power.
CBI registers separate case
Separately, the CBI has registered a case against Chandra and others over alleged wrongful loss of more than Rs 1,322 crore to LIC Housing Finance Limited through alleged misrepresentation of facts. According to LICHFL’s complaint filed on August 31, 2026, two credit facilities were granted in 2018 on the basis of Chandra’s personal guarantees: a Rs 500 crore loan to Vasant Sagar Properties Private Limited and Pan India Infraprojects Private Limited as co-borrower, and a Rs 480 crore loan to Digital Subscriber Management and Consultancy Services Private Limited and Spirit Infrapower and Multiventures Private Limited as co-borrower.
The FIR said one loan was sanctioned on the basis of a certificate showing Chandra’s net worth at Rs 59,113.21 crore as on March 31, 2017, while another certificate dated July 6, 2018 placed it at Rs 40,562 crore. It alleged that during later IBC proceedings, Chandra denied having the net worth stated in those certificates and said his net worth in 2024 was Rs 31.79 crore. The complaint accused him and the borrowers of colluding to defraud LICHFL.
A repayment plan by media baron Subhash Chandra that offered creditors ₹6.25 crore against admitted claims of ₹22,006.57 crore has drawn fresh attention to India’s personal insolvency framework. In response, the Insolvency and Bankruptcy Board of India has proposed four amendments to tighten safeguards in insolvency resolution processes for personal guarantors to corporate debtors, The Indian Express reported.
In a discussion paper issued for public comments till October 3, the IBBI said the changes are aimed at “giving banks and other creditors protections similar to those available under the corporate insolvency resolution process for companies”.
Four changes proposed
The proposals cover four areas: voting rights of related-party creditors, scrutiny of avoidance transactions during the resolution stage, mandatory valuation of the personal guarantor’s assets, and fuller recording of creditors’ objections and reasons while considering a repayment plan.
Under the first proposal, a creditor that is a related party of the guarantor would not be allowed to vote on the repayment plan. At present, an associate is barred from voting in such cases, but the IBBI said the definition of associate is narrower than that of related party. According to the paper, this gap can “allow entities acting under the guarantor’s influence to participate in voting”.
The second proposal requires the resolution professional to examine, during the resolution process itself, whether the guarantor was involved in avoidance transactions such as undervalued transactions, preference transactions and extortionate credit transactions. The findings would have to be shared with creditors before voting, and legal proceedings would need creditor approval.
The third proposal makes valuation of the guarantor’s assets compulsory. A registered valuer would be appointed to determine the fair value and realisable value of the assets, and the report would be placed before creditors along with the repayment plan.
The fourth proposal seeks more detailed records of creditor decision-making. The IBBI said the minutes should capture deliberations, objections and reasons, especially when the amount offered under a plan is “far below admitted claims or the estimated realisable value of assets”.
Subhash Chandra case in focus
The proposals come amid developments in the insolvency case involving Essel Group founder Subhash Chandra. On August 25, an NCLT single bench approved a repayment plan under which creditors were offered Rs 6.25 crore against admitted claims of Rs 22,006.57 crore. The order sparked debate over the effectiveness of the Insolvency and Bankruptcy Code.
Banks alleged that certain non-bank entities were associates or related parties of the guarantor and acted under his influence to push through the plan despite the steep haircut. On September 1, a five-member bench of the Tribunal stayed the August 25 order and barred Chandra from alienating his assets. Chandra has challenged the constitution of the five-member bench, arguing that the Tribunal does not have such a power.
CBI registers separate case
Separately, the CBI has registered a case against Chandra and others over alleged wrongful loss of more than Rs 1,322 crore to LIC Housing Finance Limited through alleged misrepresentation of facts. According to LICHFL’s complaint filed on August 31, 2026, two credit facilities were granted in 2018 on the basis of Chandra’s personal guarantees: a Rs 500 crore loan to Vasant Sagar Properties Private Limited and Pan India Infraprojects Private Limited as co-borrower, and a Rs 480 crore loan to Digital Subscriber Management and Consultancy Services Private Limited and Spirit Infrapower and Multiventures Private Limited as co-borrower.
The FIR said one loan was sanctioned on the basis of a certificate showing Chandra’s net worth at Rs 59,113.21 crore as on March 31, 2017, while another certificate dated July 6, 2018 placed it at Rs 40,562 crore. It alleged that during later IBC proceedings, Chandra denied having the net worth stated in those certificates and said his net worth in 2024 was Rs 31.79 crore. The complaint accused him and the borrowers of colluding to defraud LICHFL.