Page 6 - The Indian EYE 090426

EYE ON INDIA SEPTEMBER 04, 2026 | The Indian Eye 6

Subhash Chandra’s Rs 6.5-crore

haircut: Why the NCLT decision

has become political

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 litical optics of a case in which an
individual associated with one of
New Delhi / Mumbai
India’s major business groups is fac-
he number is startling: Rs ing claims running into thousands of
22,006 crore in admitted crores while the approved personal
Tclaims, but a repayment plan repayment is only a few crores.
of roughly Rs 6.5 crore. Put those two Yet political rhetoric should not
figures together and the result looks replace the legal question.
like a 99.97 per cent haircut. It is an Chandra has himself accused
extraordinary number, and unsur- “vested media houses” of spread-
prisingly, it has triggered outrage and ing what he calls wrong information
political accusations over whether about his insolvency proceedings and
India’s insolvency system treats pow- has urged the media to distinguish
erful businessmen differently from between total claims and the amount
ordinary borrowers. actually recoverable from him.
But the Subhash Chandra case is Both sides therefore have a
considerably more complicated than point that deserves examination. But
that headline suggests. Chandra has himself accused “vested media houses” of spreading what he calls wrong infor- critics are equally justified in asking
The first distinction is crucial. mation about his insolvency proceedings and has urged the media to distinguish between total whether the tribunal’s process has
The Rs 22,006.57 crore does not rep- claims and the amount actually recoverable from him (File photo) been sufficiently rigorous, particular-
resent money personally borrowed ly given the enormous gap between
by Chandra. The proceedings con- historical and present disclosures of
cern personal guarantees he gave for Creditors can also continue recovery merely about the headline figure. personal wealth and the opposition
loans taken by companies associated against securities and other assets of They have questioned the dramat- of several major lenders.
with the Essel Group. Government the companies. ic decline in Chandra’s disclosed The NCLT’s decision itself fol-
sources have therefore rejected the So the real question is not net worth. The material before the lowed a difference of opinion be-
description that banks have sim- whether banks have suddenly agreed tribunal reportedly showed a net tween two tribunal members before
ply written off 99.97 per cent of Rs to sacrifice Rs 22,000 crore for Rs 6.5 worth of Rs 45,888 crore in 2017 and the matter was referred to a Third
22,000 crore in loans. crore. The more difficult question is Rs 40,562 crore in 2018, compared Member. The Third Member con-
Chandra has made precisely how much can legally and realistical- with approximately Rs 31.79 crore cluded that the repayment plan sat-
the same argument. He says he was ly be recovered from Chandra in his in 2024. That extraordinary change isfied the requirements of Section
a guarantor, not the principal bor- capacity as a personal guarantor, and has naturally raised questions about 114 of the Insolvency and Bank-
rower, and that the borrowing com- whether the tribunal has adequately assets, guarantees and the extent to ruptcy Code and that creditors’ ob-
panies remain responsible for their scrutinised his assets and liabilities which the personal insolvency pro- jections did not provide sufficient
liabilities. According to his state- before approving the plan. cess captures the debtor’s actual fi- grounds for rejection.
ment, the companies for which he That is where the controversy nancial position. But there is also a broader issue
provided personal guarantees have becomes serious. And this is where the case ac- for India’s insolvency regime. The
already repaid Rs 43,000 crore and Several lenders, including LIC quires a political dimension. Insolvency and Bankruptcy Code
have assured lenders that outstand- Housing Finance, HDFC Bank, Axis Congress leader Rahul Gandhi was designed to bring discipline to
ing amounts will be settled. Bank, Canara Bank, RBL Bank and has seized upon the controversy to a system historically plagued by pro-
That explanation changes the Union Bank, opposed the repayment argue that India effectively operates longed recovery proceedings and
meaning of the controversial “haircut”. plan, despite it receiving 80.81 per with “two systems” — one for ordi- stalled assets. Its credibility depends
The approved plan reported- cent support from creditors. HDFC nary borrowers and another for pow- not only on recovering money but
ly envisages around Rs 1,494 crore Bank has now said it is exploring an erful businessmen. His description also on ensuring that creditors be-
being paid by the principal borrow- appeal before the National Company of the NCLT as the “Leader-Com- lieve the process is transparent, pre-
ers, in addition to approximately Rs Law Appellate Tribunal. pany Loot Tribunal” is deliberately dictable and equally applicable to
6.25 crore from Chandra personally. The lenders’ concerns are not provocative, but it captures the po- powerful and ordinary debtors.

www.TheIndianEYE.com