Who is Subhash Chandra? How he came to face Rs 22,000 crore in claims

The National Company Law Tribunal has now approved a repayment plan under which Subhash Chandra will pay Rs 6.5 crore against admitted creditor claims of around Rs 22,006.57 crore.

In Short

• Subhash Chandra to pay Rs 6.5 crore against Rs 22,006.57 crore dues
• Creditors to recover just 0.03%, haircut of 99.97%
• NCLT approved plan with 80.81% creditor voting support

Media baron Subhash Chandra, the founder of Zee, has been at the centre of insolvency proceedings over debts linked to companies of the group.

The National Company Law Tribunal (NCLT) has now approved a repayment plan under which Chandra will pay Rs 6.5 crore against admitted creditor claims of around Rs 22,006.57 crore.

The decision means creditors will recover nearly 0.03% of the admitted claims, resulting in a haircut of about 99.97%.

WHO IS SUBHASH CHANDRA?

Subhash Chandra is the founder of Zee, which is part of the parent Group, Essel.

The Rs 6.5-crore repayment relates to dues of Essel Group entities for which Chandra had acted as a personal guarantor.

In simple terms, Chandra had given personal guarantees for the debts of these companies. When the companies' obligations became part of the insolvency process, claims were also admitted against him as the personal guarantor.

WHY WAS CHANDRA FACING CLAIMS OF RS 22,000 CRORE?

The admitted creditor claims against Chandra stood at around Rs 22,006.57 crore.

These claims were linked to the dues of Essel Group entities for which he had provided personal guarantees. The insolvency proceedings were therefore not simply about Chandra's own spending or personal borrowing, but about liabilities connected to guarantees given for group companies.

As part of his personal insolvency resolution process, a repayment plan was proposed to settle these claims.

Under the approved plan, Chandra will pay Rs 6.5 crore.

WHY DID CREDITORS OBJECT?

Not all creditors were satisfied with the proposed repayment.

LIC Housing Finance led objections to the plan, arguing that the amount being offered was too small and that the proposal was unviable and unlawful.

LIC Housing Finance had an admitted claim of Rs 1,322.39 crore but was proposed to receive only Rs 38.09 lakh, or around 0.028% of its admitted dues.

Creditors also raised concerns that the Rs 6.5-crore amount mentioned in the repayment plan was indicative rather than certain. They argued that this made the proposal tentative and unsuitable for approval.

WHY DID NCLT APPROVE THE PLAN?

A key factor was the voting support from creditors.

Creditors representing 80.81% of the voting share backed the repayment plan, while the creditors opposing it together had less than 20% of the voting share.

The NCLT also considered the valuation of Chandra's personal estate carried out by the resolution professional. The tribunal noted that his personal estate was worth significantly less than the amount offered under the plan.

The tribunal also observed that rejecting the plan could leave Chandra facing bankruptcy, which could potentially reduce the chances of recovery for creditors.

It said that if the insolvency process was resolved and Chandra returned to financial stability, creditors could eventually have a better chance of recovering their dues directly from the principal debtors.

WHAT DID NCLT SAY ABOUT THE CREDITORS' ROLE?

The tribunal said its role was not to replace the commercial judgment of creditors or independently decide whether the repayment amount was adequate.

Its role, it said, was supervisory, corrective and judicial within the framework of the Insolvency and Bankruptcy Code.

The NCLT also held that once approved, the repayment plan would be binding on all creditors covered by it, including those who voted against it.

Dissenting creditors cannot separately pursue recovery of their full original claims outside the approved plan, as this could undermine the insolvency process and lead to unequal treatment among creditors.

WHAT HAPPENS NEXT?

Following the approval, the resolution professional has been directed to prepare and place on record a revised and final list of creditors after making the exclusions specified in the order.

The resolution professional will then take the necessary steps for redistribution of the value approved under the repayment plan.

The matter will subsequently return to the original division bench for a formal order in line with the majority opinion, as required under Section 419(5) of the Companies Act, 2013.

- Ends