Subhash Chandra's Rs 6.25-crore repayment plan put on hold: What happens next

A five-member special bench of the NCLT on Tuesday stayed the operation of the August 25 order that had approved Chandra's repayment plan.

In Short

• NCLT puts hold on Subhash Chandra’s Rs 6.25-crore repayment plan
• Five-member special bench stayed earlier two-member bench’s order
• Chandra barred from selling or transferring any properties meanwhile

Essel Group chairman Subhash Chandra’s personal insolvency case has hit another roadblock. The National Company Law Tribunal (NCLT) has put its earlier approval of his Rs 6.25-crore repayment plan on hold, meaning the plan cannot be acted upon for now.

The tribunal has also stopped Chandra from selling or transferring any of his properties, directly or indirectly, until the matter is considered again.

WHY HAS THE NCLT PAUSED THE ORDER?

A five-member special bench of the NCLT on Tuesday stayed the operation of the August 25 order that had approved Chandra’s repayment plan.

The move came after the tribunal found that there was no clear majority view in the earlier proceedings. The case had initially been heard by a two-member bench, whose members had different views on whether Chandra’s plan should be approved.

One member had supported the plan, but wanted it to apply only to creditors who had voted in its favour. The other member rejected the plan, pointing to serious issues in the process followed by the resolution professional.

The difference of opinion led to the matter being referred to a third member.

WHAT HAPPENED TO THE RS 6.25-CRORE PLAN?

On August 25, the third member approved Chandra’s repayment plan. The plan proposed a payment of Rs 6.25 crore against admitted claims of Rs 22,006.57 crore.

However, the third member excluded certain claims submitted through Anil Kumar on behalf of 960 individuals and those submitted through Sunil Jain on behalf of 300 individuals. The amount linked to these claims was to be redistributed among the remaining eligible creditors.

The third member also held that the approved plan would be binding on all creditors, including those who had voted against it.

The case then went back to the original two-member bench.

On August 31, the bench found that no majority view had emerged from the three opinions. With the views still divided, the matter was referred to the NCLT President, who set up a five-member special bench.

WHAT DOES THE STAY MEAN FOR CHANDRA?

For Chandra, the latest order means that the Rs 6.25-crore repayment plan is no longer cleared for implementation.

The August 25 approval has been put on hold while the five-member bench looks at the matter afresh. So, the plan that appeared to offer a route towards resolving his personal insolvency case cannot move forward for now.

The tribunal has also directed Chandra, as a guarantor, not to alienate any of his properties, either directly or indirectly.

In simple terms, he cannot sell or transfer his properties while the special bench considers the case.

WHY IS THE RS 22,006.57-CRORE FIGURE IMPORTANT?

The Rs 22,006.57-crore amount refers to the admitted claims in Chandra’s personal insolvency proceedings. It does not mean that Chandra personally borrowed Rs 22,000 crore from banks.

Chandra has maintained that the amount relates to personal guarantees he gave for loans taken by companies associated with the Essel Group.

The insolvency proceedings were initiated by Indiabulls Housing Finance under Section 95 of the Insolvency and Bankruptcy Code (IBC).

Under his proposed repayment plan, Chandra offered Rs 6.25 crore to creditors, along with Rs 25 lakh towards the costs of the insolvency process.

Meanwhile, the five-member special bench will now hear the matter afresh. It will consider the conflicting views from the earlier proceedings and decide the way forward.

For now, there is no final approval of the Rs 6.25-crore repayment plan that can be acted upon. Chandra also remains barred from directly or indirectly transferring or selling his properties.

The latest order does not finally reject the repayment plan either. Its fate will be decided in the proceedings before the special bench.

- Ends