NEW DELHI: The National Company Law Tribunal (NCLT) has put on hold its earlier order allowing Zee Group founder Subhash Chandra to settle his personal insolvency proceedings by paying Rs 6.25 crore against admitted claims of Rs 22,006.57 crore.
A five-member special bench of the NCLT on Tuesday stayed the operation of the August 25 order and directed Chandra, in his capacity as guarantor, not to alienate any of his properties, either directly or indirectly. The tribunal has also issued notices to all parties and decided to hear the matter afresh after finding that there was no clear majority view emerging from the earlier proceedings.
The latest development puts the repayment plan, which had appeared to clear the way for the conclusion of Chandra’s personal insolvency proceedings, on hold for now.
The matter was initially heard by a two-member NCLT bench, whose members delivered differing opinions on Chandra’s repayment plan.
One member had favoured approving the plan only for creditors who had supported it, while allowing dissenting creditors, including banks and financial institutions, to pursue independent remedies for recovery.
The other member rejected the plan, citing what the tribunal found to be serious defects in the process followed by the resolution professional.
Because of the difference of opinion, the matter was referred to a third member under Section 419(5) of the Companies Act, 2013.
On August 25, the third member held that the repayment plan should be approved. However, the order excluded claims submitted through Anil Kumar on behalf of 960 individuals and those submitted through Sunil Jain on behalf of 300 individuals. The amount allocated to those claims was instead directed to be redistributed among the remaining eligible creditors.
The third member also held that the approved plan would bind all creditors, including those who had voted against it, under Section 115 of the Insolvency and Bankruptcy Code (IBC).
The case then returned to the original two-member bench.
On August 31, that bench found that no majority view had actually emerged from the three opinions. The technical member had rejected the plan, the judicial member had sought to limit its operation to supporting creditors, while the third member had approved it and made it binding on all creditors.
With the three views differing, the matter was referred to the NCLT President, who constituted the five-member special bench that has now taken up the case.
WHAT WAS THE RS 6.25-CRORE PLAN?
The insolvency proceedings against Chandra were initiated by Indiabulls Housing Finance under Section 95 of the IBC.
Under the repayment plan, Chandra proposed to pay Rs 6.25 crore to creditors against admitted claims of Rs 22,006.57 crore. A further Rs 25 lakh was earmarked towards the costs of the insolvency process.
The large gap between the admitted claims and the proposed payment had attracted considerable attention because the plan would have resulted in creditors receiving only a small fraction of their admitted claims.
The latest NCLT order means that the August 25 approval cannot presently be acted upon while the special bench considers the matter afresh.
The Rs 22,006.57-crore figure relates to claims in Chandra’s personal insolvency proceedings as a guarantor.
Chandra has previously clarified that he did not personally borrow Rs 22,000 crore from banks or financial institutions. He said the amount related to personal guarantees he had provided for loans taken by companies associated with the Essel Group.
In a statement issued after the NCLT order, Chandra’s office said his total personal guarantees were around Rs 22,000 crore, while emphasising the distinction between his own borrowing and the loans taken by the underlying companies.
The latest NCLT order itself describes the proceedings as a personal insolvency case arising from guarantees provided by Chandra for borrowing entities.
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