Subhash Chandra insolvency: Why are creditors set to recover only ₹6.5 crore against ₹22,006 crore claims?

The case concerns proceedings by Indiabulls Housing Finance over a ₹170-crore loan given to Vivek Infracon Private Limited, for which Mr. Chandra had provided a personal guarantee

Published - August 30, 2026 06:26 pm IST

Essel Group Chairman Subhash Chandra. | Photo Credit: Akhilesh Kumar

The story so far: The National Company Law Tribunal (NCLT) on August 25 approved a repayment plan for Essel Group founder Subhash Chandra under the Insolvency and Bankruptcy Code, 2016 (IBC). Under the plan, ₹6.25 crore will be paid to creditors and ₹25 lakh towards the insolvency resolution process costs. This is against admitted claims of ₹22,006.57 crore, implying a recovery of about 0.03%, or a haircut of nearly 99.97%, which means a drop in the value of collateral assets, which reduces the lender’s protection against losses. Some creditors, including HDFC Bank, have opposed the plan and are considering an appeal.

What was the case against Subhash Chandra?

The case before the NCLT concerned Mr. Chandra’s liability as a personal guarantor and was not against the Essel Group as a corporate entity.

The proceedings were initiated by Indiabulls Housing Finance in connection with a ₹170-crore loan to Vivek Infracon Private Limited, for which Mr. Chandra had provided a personal guarantee.

A personal guarantee is a promise by an individual to repay a borrower’s debt if the borrower defaults.

“It is important to clarify at the very beginning that the present case, filed by Indiabulls Housing Finance Ltd., pertains to a personal guarantee provided by Dr. Chandra for loans sanctioned to M/s Vivek Infracon Private Limited,” said advocate Rohan S. Vasa, a Mumbai-based counsel practising insolvency and commercial litigation.

In a press statement issued on Thursday (August 27, 2026), Mr. Chandra’s office clarified that he has not borrowed any money from any lender. “Chandra is only a personal guarantor. The total claim against Subhash Chandra as a personal guarantor in the personal insolvency proceedings is only ₹3,992 crore by the objectors of the plan and not ₹22,000 crore,” the statement said.

How is personal insolvency different from corporate insolvency?

A company and the individual who owns or controls it are separate legal persons. Consequently, insolvency proceedings against a company and its personal guarantor are separate proceedings, although they may arise from the same borrowing.

In a corporate insolvency resolution process (CIRP), the focus is on resolving the company’s financial distress, generally through a resolution plan and, failing that, liquidation. In personal-guarantor insolvency, the individual can propose a repayment plan to creditors.

“In a corporate insolvency, the Code envisages the resolution of a company’s debt by taking over its management and finding a buyer or revival plan, whereas in personal insolvency, the first step is to allow the borrower to propose a repayment plan to be voted on by the creditors, if approved by the creditors and the NCLT, the Code provides the guarantor with a fresh start by passing a discharge order under section 119 of the Code.” said Mr. Vasa.

The two proceedings can run simultaneously. Section 60 of the IBC provides for insolvency proceedings relating to a personal guarantor of a corporate debtor to be dealt with by the NCLT where proceedings against the corporate debtor are pending.

“The legal rationale for simultaneous proceedings is based on the settled principle of law found in contract jurisprudence i.e., the liability of a guarantor is coextensive and independent of the principal borrower’s liability,” said Mr. Vasa.

Thus, Mr. Chandra’s personal insolvency does not itself settle the liabilities of the Essel-linked companies that borrowed the money. Creditors can continue to pursue the principal borrowers through their own legal or insolvency proceedings.

Why is the recovery only ₹6.5 crore?

The admitted claims in Mr. Chandra’s personal insolvency proceedings total ₹22,006.57 crore. Against this, the repayment plan provides ₹6.25 crore to creditors and ₹25 lakh towards process costs.

The 99.97% haircut is therefore a comparison between the total admitted claims and the amount proposed for distribution under Mr. Chandra’s personal repayment plan. It does not mean that Mr. Chandra personally borrowed ₹22,006 crore.

“The ‘99.97% haircut’ is a comparison against admitted claims, ₹22,006.57 crore, not against realisable assets that the guarantor, Dr. Chandra in this case, actually owns,” said Mr. Vasa.

The resolution professional assessed Mr. Chandra’s disclosed personal assets at about ₹31.79 crore. The NCLT considered whether creditors would be better off under the repayment plan than if Mr. Chandra were pushed into bankruptcy, and approved the plan.