NCLT Halts Subhash Chandra Asset Sale, Challenges Rs 6.5 Cr Debt Deal

In a significant development, the National Company Law Tribunal (NCLT) has barred Essel Group chairman Subhash Chandra from selling any of his assets, putting a hold on a controversial settlement plan that would have seen lenders recover a mere Rs 6.5 crore against claims totaling approximately Rs 22,006 crore. A newly formed five-member special bench of the NCLT, led by President Justice Anupinder Singh Grewal, stated that an earlier order approving the settlement could not be implemented due to the absence of a clear majority view among its members. This dramatic intervention underscores the tribunal's intent to thoroughly examine the highly contentious repayment proposal. The dispute centers on claims against Chandra as a personal guarantor for loans taken by various Essel Group companies, which spiraled after the 2018 IL&FS liquidity crisis. While Chandra contends the Rs 22,006 crore figure largely misrepresents his personal liability, referring to it as claims against guarantees rather than direct borrowings, the proposed Rs 6.5 crore payout represents a staggering 99.9% 'haircut' for creditors. This massive reduction sparked strong opposition from dissenting lenders, including LIC Housing Finance, Canara Bank, and Union Bank, who have actively challenged the plan and even moved the National Company Law Appellate Tribunal (NCLAT). The NCLT has issued notices to all involved parties and is set to hear the matter afresh, with the next hearing scheduled for September 23. Meanwhile, the NCLAT is also taking up the case, indicating a prolonged legal battle ahead. This ongoing scrutiny will likely set an important precedent for future personal insolvency cases in India, especially concerning the liabilities of corporate guarantors and the recovery avenues available to creditors.