Debunking The Rs 22,006 Crore Confusion: What The NCLT Order On Subhash Chandra Really Means

The National Company Law Tribunal’s approval of a repayment plan involving Essel Group founder Subhash Chandra has triggered confusion over whether lenders have accepted a near-total write-off on claims of about Rs 22,006 crore. According to sources citing the insolvency court’s order, that reading is misleading because the figure relates to admitted claims against Chandra as a personal guarantor, not loans directly borrowed by him.

The distinction matters for banks, investors and borrowers tracking insolvency recoveries. Sources said the plan allows recovery of about Rs 6.25 crore from Chandra’s personal estate. However, the underlying corporate borrowers remain liable for their debts, and the repayment plan separately envisages payments of about Rs 1,494 crore by those borrowers, apart from Chandra’s personal contribution.

Why the Rs 22,006 crore figure is being disputed

According to sources referring to the facts placed in the matter, the Rs 22,006 crore represents claims admitted against Chandra because he had given personal guarantees for loans taken by several Essel and Zee-linked companies. It does not mean Chandra had personally borrowed the entire amount from banks or financial institutions.

Sources said only about Rs 2,574 crore of the admitted claims relate to loans where Chandra’s personal guarantee was provided at the time of original borrowing. Most other guarantees, according to the same sources, were furnished later as additional security for corporate loans. This is why the reported 99.97 per cent “haircut” needs a narrower reading.

The percentage, sources said, applies to the amount being recovered from Chandra in his personal-guarantor capacity. It should not be read as a 99.97 per cent loss on the full Rs 22,006 crore of corporate debt. Creditors continue to have recovery rights against the principal borrowers, securities and other assets available under law.

What the NCLT-approved plan covers

The insolvency proceedings against Chandra arose after he had provided a personal guarantee for a loan to Vivek Infracon from Indiabulls, according to sources familiar with the case record. After default, creditors initiated proceedings against him in his capacity as guarantor. The NCLT approval relates to that personal-guarantor process.

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. The tribunal, according to sources citing the order, held that the objections were not enough to overturn the creditor-approved resolution.

Creditors who opposed the plan questioned the low recovery from Chandra’s personal estate. Sources said they cited earlier net-worth certificates showing Chandra’s net worth at about Rs 45,888 crore in 2017 and Rs 40,562 crore in 2018. This was compared with a presently disclosed net worth of around Rs 31.79 crore, prompting demands for deeper scrutiny of assets.

Chandra’s statement has also claimed that companies linked to the matter have so far paid about Rs 43,000 crore to creditors. Sources said this claim forms part of the broader context around Essel Group’s debt reduction efforts, but it does not change the legal nature of the NCLT process approved against him as a personal guarantor.

Why banks still have recovery options

Under the Insolvency and Bankruptcy Code framework, a personal guarantor proceeding is separate from the liability of the principal borrower. Sources said this is central to understanding the order. If a guarantor’s personal estate yields limited recovery, that does not automatically extinguish lenders’ rights against the companies that originally borrowed the money.

In practical terms, banks can still pursue claims against the corporate borrowers, enforce available securities and recover from other assets where permitted. Sources said the approved plan should therefore be viewed as a resolution of Chandra’s personal-guarantor liability, not a full settlement of debt owed by Essel or Zee-linked borrower entities.

The case has also revived debate about personal guarantees in large corporate lending. Banks often seek promoter guarantees as additional comfort when lending to companies. However, recoveries from such guarantees depend on the guarantor’s available and legally identifiable personal assets at the time of resolution, according to insolvency professionals cited in industry discussions.

IBC record differs from the Chandra case

Sources said the Chandra matter is an exceptional personal-guarantor resolution and should not be treated as representative of overall corporate insolvency recoveries under the IBC. Data cited in the response shows creditors recovered about Rs 4.32 lakh crore through approved resolution plans up to March 2026.

According to the same data cited by sources, those recoveries amounted to 116.85 per cent of liquidation value and 94.56 per cent of fair value. These metrics are often used to judge whether creditors recovered more through resolution than they would have received if stressed companies were liquidated.

Sources also pointed to more than 32,000 cases settled before admission into insolvency since the IBC was introduced, involving assets worth about Rs 14 lakh crore. Such settlements are viewed by policymakers as evidence of the law’s deterrent effect, where borrowers resolve disputes after an insolvency application is filed but before formal admission.

The banking system’s stressed asset position has also improved over this period. According to data cited by sources, net non-performing assets of scheduled commercial banks fell from 5.94 per cent in March 2018 to 0.48 per cent in September 2025. In absolute terms, the amount declined from about Rs 5.2 lakh crore to Rs 94,000 crore.

Sources further cited an IIM Ahmedabad study that found 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. These figures are used to argue that resolution can preserve economic value.

For lenders and markets, the key takeaway is narrower than the public debate suggests. According to sources citing the NCLT order, the Rs 6.25 crore recovery is tied to one individual’s personal-guarantor estate. It does not by itself amount to banks writing off the full Rs 22,006 crore owed by the underlying corporate borrowers.

FAQs

What does the Rs 22,006 crore figure refer to in the NCLT order context?

It refers to claims admitted against Subhash Chandra in his capacity as a personal guarantor. It does not mean he personally borrowed the entire amount.

Why is the near-total write-off interpretation considered misleading?

The reported percentage applies to what can be recovered from Chandra’s personal-guarantor side, not to the full amount of corporate debt. Creditors can still pursue recovery against principal borrower entities and available securities and assets.

What recovery amount is linked to Chandra’s personal estate under the approved plan?

The plan allows recovery of about Rs 6.25 crore from Chandra’s personal estate. It also separately anticipates payments of about Rs 1,494 crore by the underlying corporate borrowers.

What was the NCLT approval based on in Chandra’s case?

The proceedings followed default on a loan to Vivek Infracon from Indiabulls after Chandra provided a personal guarantee. The NCLT approval relates specifically to the personal-guarantor process.

How does a personal guarantor proceeding differ from the liability of the main borrowers under the IBC framework?

A personal guarantor proceeding is separate from the principal borrower’s liability. Limited recovery from the guarantor does not automatically remove lenders’ rights against the corporate borrowers and other legally recoverable assets.