Creditors Move NCLAT Challenging NCLT Order Slicing Subhash Chandra’s Liability to ₹6.25 Crore
A huge legal tussle has broken out in relation to the personal insolvency case filed against Essel Group founder Subhash Chandra, with distressed lenders turning to the appellate forum to intensify their battle.
The financial lenders have been sounding alarm bells following the approval by the National Company Law Tribunal (NCLT) of a debt repayment scheme under which Chandra can resolve his admitted liabilities of around ₹22,006 crore through payment of just ₹6.25 crore.
Taking up the matter on behalf of LIC Housing Finance, Solicitor General Tushar Mehta has rushed to the National Company Law Appellate Tribunal (NCLAT) to take the legal challenge forward. Mehta says that allowing a repayment in which creditors receive a paltry 0.028% of their claims only serves to defeat the very purpose of the Insolvency and Bankruptcy Code. Accepting the seriousness of the case, the NCLAT bench has decided to hear the appeal.
The genesis of the matter lies in the loans advanced to companies owned by the Essel Group, with Chandra having offered himself as a guarantor for these transactions. The lenders, including Indiabulls (now Sammaan Capital), launched the personal insolvency petition against him last year.
Despite the dissenting views from other lenders, those holding about 80.8% of the voting share finally voted to accept the compromise settlement amount of ₹6.25 crores.
The dissenting lenders, which include LIC Housing Finance and HDFC Bank, vehemently oppose the deal. The banks noted that the net worth certificates show Chandra having a net worth of about ₹45,888 crore in 2017 compared to his current net worth of about ₹31.79 crore.
Chandra’s office, however, explains that the enormous ₹22,000 crore debt is against Chandra solely as a guarantor rather than a borrower, pointing out that the liability lies with the corporate principal borrowers. Additionally, NCLT contends that refusing to approve the deal might lead to Chandra filing for bankruptcy, which will give them even less.
