Subhash Chandra’s payment of ₹ 6.5 cr towards payment of charges cleared by NCLT; Congress calls it ‘mundane’: Key things to know | Today’s news

The National Company Law Tribunal (NCLT) has approved a resolution plan allowing media tycoon Subhash Chandra to settle admitted claims around ₹22,006.57 crore by paying creditors only ₹6.5 million. The proposed recovery represents a reduction of creditors’ claims by almost 99.97%.

The Congress condemned the NCLT order in the Chandra case, saying the massive reduction was not just a “haircut” but “mundane”, adding that it made a “complete mockery” of the 2016 Insolvency and Bankruptcy Code.

NCLT Member (Judicial) Nilesh Sharma, acting as the third member of the tribunal, approved the resolution plan under Section 114 of the Insolvency and Bankruptcy Code (IBC), according to PTI on Tuesday. The tribunal rejected objections from creditors who argued that the proposed recovery was too low to justify approval of the plan.

Quick answers to key questions

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Subhash Chandra is paying ₹6.5 crore to settle admitted claims of around ₹22,006.57 crore.

The NCLT approved the plan after finding that rejecting it could lead to worse outcomes for creditors as Chandra’s assets were valued at less than the repayment offered.

Lenders are expected to recover around 0.028% of their original claims, which translates to around three payments for every ₹100 owed.

Creditors criticized the plan as “unviable and illegal”, pointing out that the amount proposed was negligible and calling it uncertain due to its indicative nature.

Critics, including congressional officials, say the settlement represents a complete sacrifice of creditors’ claims, much like “mundanes,” because of the extremely low recovery offered.

The matter came before a third member after a two-judge bench of the NCLT delivered a split decision, prompting the tribunal president to appoint Nilesh Sharma to resolve the disputes.

The settlement is “unviable and illegal,” the creditors say

Sharma dismissed objections raised by dissenting lenders led by LIC Housing Finance, who termed the proposed settlement as “unviable and illegal”.

Lenders argued that the plan offered only ₹6.25 crore against total admitted claims of around ₹22,006.57 crore while allocating another ₹25 million to cover the costs of insolvency proceedings.

“In the case of LICHFL, whose admitted claim stood in place ₹1,322.39 crore, the proposed installment was only ₹38,09,294, which is approximately 0.028 percent of her recognized fees. It was contended that such negligible installment could not receive the approval of this Tribunal,” the NCLT order said.

Dissenting creditors also pointed out that i ₹The 6.5 billion proposed under the installment plan has been described as an indicative figure rather than a guaranteed payment. They said this made the plan uncertain, provisional and unsuitable for approval.

The installment plan also described the proposed ₹The payment of 6.5 million crowns as an indicative amount, not as a guaranteed amount, which, according to the dissenting creditors, makes the proposal uncertain and unsuitable for approval.

However, the NCLT noted that the creditors who opposed the plan together represented less than 20 percent of the voting rights. The proposal received the required approval with 80.81 percent of the votes in favor.

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In his 144-page order, Sharma said a resolution expert’s valuation found Chandra’s personal assets to be worth substantially less than the amount offered under the plan. He added that the dissenting creditors were unlikely to achieve better recovery by rejecting the proposal, as it would drive Chandra into bankruptcy rather than allow it to repay creditors through a financially viable solution.

“If the scheme is approved and the debtor’s insolvency is resolved and put on its feet, the objectors would ultimately have a better chance of recovering their debts directly from the principal debtors,” the NCLT said.

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The tribunal said it could not override the creditors’ business judgment or independently determine whether the amount offered as part of the settlement was sufficient.

He further stated that “creditors’ business decisions operate within the statutory framework, not outside of it”.

Chandra issues a statement

Clarifying in his statement that he did not personally borrow from the lenders but signed the guarantees, Chandra said, “Dr. Subhash Chandra does not borrow from any of the lenders mentioned in the warrant or any other lender/lender. He has only signed personal guarantees.”

While guaranteeing businesses, he almost borrowed ₹Chandra noted that approximately 45,000 crore ₹43,000 crore was repaid and highlighted his current net worth ₹31.79 crore, largely comprising a ₹25 million residential properties.

HDFC Bank may invite NCLT nod

HDFC Bank is considering an appeal against the NCLT decision.

India’s largest private sector lender told Mint on Thursday that the approved plan would allow it to recover only 3.2% of the total receivable. HDFC Bank opposed the proposal and voted against it during the insolvency proceedings. The creditor is now considering an appeal to the National Company Law Appellate Tribunal (NCLAT).

Congress is responding

Congress General Secretary Jairam Ramesh said on X: “In financial terminology, when money is owed to creditors and the debtor pays back only a portion of it, the difference expressed as a percentage is called deduction.

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“This is not just a haircut. It is actually mundane and makes a complete mockery of the Insolvency and Bankruptcy Act 2016,” Ramesh added.

What did Vijay Mallya say?

Alleged fugitive businessman Vijay Mallya has again claimed that banks have already recovered money from him but justice continues to be denied to him.

Reacting to the development, Mallya said, “If it is true, many congratulations to my friend Subhash. The banks and the government have admitted that they have recovered. ₹14,100 crores from me against the judgment debt of Rs ₹6203 million crowns. Many more borrowers settled for a fraction. I assume that solving the Indian debt justice. No media inquiries.”