NCLT order misread: Subhash Chandra's ₹22,006 cr case isn't a 99.97% bank loss, say govt sources

The National Company Law Tribunal's (NCLT) approval of a repayment plan for Essel Group founder Subhash Chandra does not amount to a 99.97% haircut on more than ₹22,000 crore of bank loans, said government sources, clarifying that the figure represents claims admitted against Chandra in his capacity as a personal guarantor.

Chandra has been approved to pay around ₹6.25 crore from his personal estate against admitted claims of about ₹22,006 crore. However, the ₹22,006 crore figure should not be treated as loans personally borrowed by Chandra or as the amount originally lent against his personal guarantee, government sources said.

Only around ₹2,574 crore of the admitted claims relate to loans where Chandra's personal guarantee was provided at the time of the original borrowing, according to government sources. Most of the remaining guarantees were provided subsequently as additional security.

What the NCLT case involves

The insolvency proceeding is against Chandra as a personal guarantor and not against the principal corporate borrowers. It arose after a loan to Vivek Infracon from Indiabulls defaulted, following which insolvency proceedings were initiated against Chandra under the Insolvency and Bankruptcy Code (IBC).

The distinction is important because the approved repayment plan does not settle the underlying liabilities of the principal borrowers. Government sources said the plan envisages around ₹1,494 crore in payments by the principal borrowers, in addition to ₹6.25 crore from Chandra personally.

Creditors will also retain recovery avenues against securities and other available assets of the companies.

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Why the ₹6.25 crore figure was contested

The amount recoverable from Chandra personally reflects the assets presently disclosed as available or realisable from his estate, government sources said.

Creditors had challenged the repayment proposal, pointing to historical net-worth certificates that showed Chandra's net worth at ₹45,888 crore in 2017 and ₹40,562 crore in 2018, compared with a presently disclosed net worth of around ₹31.79 crore.

The repayment plan, however, was not imposed unilaterally by the tribunal. It received 80.81% voting support from creditors. Several lenders, including LIC Housing Finance, HDFC Bank, Axis Bank, Canara Bank, RBL Bank and Union Bank, opposed the plan. The NCLT nevertheless held that the objections were insufficient to overturn the creditor-approved plan.

What the case says about IBC recoveries

Government sources said the Subhash Chandra case is an exceptional resolution involving a personal guarantor and should not be viewed as representative of corporate insolvency recoveries under the Insolvency and Bankruptcy Code (IBC).

Creditors have recovered around ₹4.32 lakh crore through approved resolution plans up to March 2026. These recoveries amounted to 116.85% of liquidation value and 94.56% of fair value.

Since the IBC was introduced, more than 32,000 cases have been settled before admission into the insolvency process, unlocking assets worth around ₹14 lakh crore. These settlements also reflect the deterrent effect of the law, as borrowers settled after an IBC application was filed but before the case was formally admitted.

The recovery framework has also coincided with a sharp improvement in banks' asset quality. Net NPAs of scheduled commercial banks declined from 5.94% in March 2018 to 0.48% by September 2025, while the absolute amount fell from about ₹5.2 lakh crore to ₹0.94 lakh crore.

An IIM Ahmedabad study found that firms resolved through the insolvency process recorded 76% growth in sales, 50% growth in total assets, 50% growth in employee expenses and 130% growth in capital expenditure, indicating an expansion in business activity and employment following resolution.

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An IIM Ahmedabad study cited by the government found that resolved firms recorded 76% growth in sales, 50% growth in total assets, 50% growth in employee expenses and 130% growth in capital expenditure.

The government sources said the Chandra case should therefore be viewed as a resolution of his personal-guarantor liability, rather than a ₹22,000 crore loan write-off by banks.

Subhash Chandra explains

The office of Zee founder Subhash Chandra on Thursday issued a clarification on reports concerning his personal insolvency proceedings before the National Company Law Tribunal (NCLT), saying the widely cited ₹22,000-crore figure does not represent the amount currently owed by him.

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According to the clarification, the ₹22,000-crore figure refers to the total value of guarantees signed by Chandra for loans taken by companies that had, at various points, fallen under the Essel Group banner. The office said Chandra had not personally borrowed money from lenders but had provided personal guarantees for the corporate loans.

Claims from objecting lenders

The office said lenders that objected to the repayment plan had filed claims totalling ₹3,992 crore against Chandra as a personal guarantor. Of this, claims worth ₹620 crore had been settled, leaving ₹3,372 crore.

It said the borrowing entities had offered to pay around ₹1,113 crore to multiple lenders, with discussions continuing.

The clarification said lenders had released ₹2,856 crore in the relevant cases, while borrowers had repaid ₹1,633 crore, leaving a balance of ₹1,223 crore against claims of ₹3,992 crore.

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Other lenders

The office also referred to lenders that had either accepted the repayment plan or had not objected to it. Their claims stood at ₹16,386 crore when filed, of which ₹16,201 crore was admitted.

According to the clarification, the borrowing entities have disputed these claims and are working to settle the remaining amounts. The proposed settlements form part of the repayment plan approved by the NCLT.