The insolvency ruling involving Essel Group founder Subhash Chandra has triggered a political storm, but the real controversy lies in the gap between the headline Rs 22,000-crore claim and what the insolvency process actually seeks to recover from him personally.
Our Bureau
New Delhi / Mumbai
The number is startling: Rs 22,006 crore in admitted claims, but a repayment plan of roughly Rs 6.5 crore. Put those two figures together and the result looks like a 99.97 per cent haircut. It is an extraordinary number, and unsurprisingly, it has triggered outrage and political accusations over whether India’s insolvency system treats powerful businessmen differently from ordinary borrowers.
But the Subhash Chandra case is considerably more complicated than that headline suggests.
The first distinction is crucial. The Rs 22,006.57 crore does not represent money personally borrowed by Chandra. The proceedings concern personal guarantees he gave for loans taken by companies associated with the Essel Group. Government sources have therefore rejected the description that banks have simply written off 99.97 per cent of Rs 22,000 crore in loans.
Chandra has made precisely the same argument. He says he was a guarantor, not the principal borrower, and that the borrowing companies remain responsible for their liabilities. According to his statement, the companies for which he provided personal guarantees have already repaid Rs 43,000 crore and have assured lenders that outstanding amounts will be settled.
That explanation changes the meaning of the controversial “haircut”.
The approved plan reportedly envisages around Rs 1,494 crore being paid by the principal borrowers, in addition to approximately Rs 6.25 crore from Chandra personally. Creditors can also continue recovery against securities and other assets of the companies.
So the real question is not whether banks have suddenly agreed to sacrifice Rs 22,000 crore for Rs 6.5 crore. The more difficult question is how much can legally and realistically be recovered from Chandra in his capacity as a personal guarantor, and whether the tribunal has adequately scrutinised his assets and liabilities before approving the plan.
That is where the controversy becomes serious.
Several lenders, including LIC Housing Finance, HDFC Bank, Axis Bank, Canara Bank, RBL Bank and Union Bank, opposed the repayment plan, despite it receiving 80.81 per cent support from creditors. HDFC Bank has now said it is exploring an appeal before the National Company Law Appellate Tribunal.
The lenders’ concerns are not merely about the headline figure. They have questioned the dramatic decline in Chandra’s disclosed net worth. The material before the tribunal reportedly showed a net worth of Rs 45,888 crore in 2017 and Rs 40,562 crore in 2018, compared with approximately Rs 31.79 crore in 2024. That extraordinary change has naturally raised questions about assets, guarantees and the extent to which the personal insolvency process captures the debtor’s actual financial position.
And this is where the case acquires a political dimension.
Congress leader Rahul Gandhi has seized upon the controversy to argue that India effectively operates with “two systems” — one for ordinary borrowers and another for powerful businessmen. His description of the NCLT as the “Leader-Company Loot Tribunal” is deliberately provocative, but it captures the political optics of a case in which an individual associated with one of India’s major business groups is facing claims running into thousands of crores while the approved personal repayment is only a few crores.
Yet political rhetoric should not replace the legal question.
Chandra has himself accused “vested media houses” of spreading what he calls wrong information about his insolvency proceedings and has urged the media to distinguish between total claims and the amount actually recoverable from him.
Both sides therefore have a point that deserves examination. But critics are equally justified in asking whether the tribunal’s process has been sufficiently rigorous, particularly given the enormous gap between historical and present disclosures of personal wealth and the opposition of several major lenders.
The NCLT’s decision itself followed a difference of opinion between two tribunal members before the matter was referred to a Third Member. The Third Member concluded that the repayment plan satisfied the requirements of Section 114 of the Insolvency and Bankruptcy Code and that creditors’ objections did not provide sufficient grounds for rejection.
But there is also a broader issue for India’s insolvency regime. The Insolvency and Bankruptcy Code was designed to bring discipline to a system historically plagued by prolonged recovery proceedings and stalled assets. Its credibility depends not only on recovering money but also on ensuring that creditors believe the process is transparent, predictable and equally applicable to powerful and ordinary debtors.