On September 1, 2026, a five‑member bench of the National Company Law Tribunal (NCLT) set aside an earlier order that had approved a repayment plan requiring Essel Group founder Subhash Chandra to pay just ₹6.25 crore against admitted claims of ₹22,006.57 crore. The bench, chaired by President Justice (retd) Anupinder Singh Grewal, also issued a restraining direction preventing Chandra from alienating any of his assets, either directly or indirectly.
Background of the insolvency proceedings
The personal insolvency case against Chandra dates back to 2024 when Indiabulls Housing Finance petitioned the NCLT to enforce personal guarantees that Chandra had provided for loans taken by entities linked to the Essel Group. The proceedings focus solely on Chandra’s liability as a personal guarantor and are separate from insolvency matters involving his group companies or regulatory actions against Zee Entertainment Enterprises.
In August 2026, a single‑member bench led by Judicial Member Nilesh Sharma delivered an order that endorsed a repayment plan supported by creditors holding 80.814 % of the voting share. The plan required Chandra to contribute ₹6.25 crore from his personal estate toward the admitted claims of ₹22,006.57 crore, effectively imposing a haircut of more than 99 % on dissenting creditors, which include major banks and financial institutions.
Procedural developments leading to the stay
Earlier, a two‑member bench in New Delhi—Judicial Member Ashok Kumar Bhardwaj and Technical Member Reena Sinha Puri—had issued a split verdict on the repayment plan in September 2025. To break the deadlock, the tribunal appointed a third member, Nilesh Sharma, whose August 25, 2026 opinion favored the plan. However, when the matter returned to the original two‑member bench, it concluded that Sharma had issued an independent order rather than concurring with either of the earlier opinions, leaving the tribunal without a clear majority view as required under Section 419(5) of the Companies Act, 2013.
Consequently, the NCLT President constituted a five‑member special bench on August 31, 2026. The bench consists of President Justice (retd) Anupinder Singh Grewal, Judicial Members Bachu Venkat Balaram Das and Mahendra Khandelwal, and Technical Members Atul Chaturvedi and Ravindra Chaturvedi. On September 1, the bench stayed Sharma’s August 25 order, stating that “there is no clear majority view capable of being given effect to.” The bench also issued notices to all parties and invited further submissions before a scheduled hearing on September 23, 2026.
Creditor opposition and asset‑restriction order
Dissenting creditors, notably LIC Housing Finance (LICHFL) and Union Bank of India, have challenged the repayment plan before the National Company Law Appellate Tribunal (NCLAT). Representing the creditors before the NCLT special bench, Solicitor General Tushar Mehta sought a direction to prevent Chandra from disposing of any property, arguing that such disposal would undermine the creditors’ “substratum.” The bench acceded to the request, expressly directing that the personal guarantor shall not alienate any assets, either directly or indirectly.
LIC Housing Finance, which holds an admitted claim of ₹1,322.39 crore, labeled the repayment terms “unviable and unlawful.” Under the plan, the lender would receive only ₹38.09 lakh, amounting to roughly 0.028 % of its admitted dues. The lender also highlighted that the plan offered merely ₹6.25 crore to all creditors against claims exceeding ₹22,000 crore, plus a modest ₹25 lakh for insolvency process costs.
On August 30, 2026, Chandra asserted that borrowers whose loans were secured by his personal guarantees had promised to reconcile their accounts with lenders and settle the outstanding ₹4,262 crore. Nevertheless, the tribunal’s August 25 order emphasized that approving the repayment plan would likely yield a better outcome for creditors than initiating bankruptcy proceedings against Chandra.
The order also noted that once creditors approve a repayment plan in accordance with the Insolvency and Bankruptcy Code, the tribunal typically defers to their commercial judgment rather than conducting its own assessment of the guarantor’s financial position.
Legal experts observing the case have pointed out that the stay highlights the challenges of relying on personal guarantees when the guarantor’s assets are a fraction of the total claims. The pending NCLAT challenge and the forthcoming September 23 hearing suggest that the final resolution of the repayment plan remains uncertain.
As the NCLT special bench proceeds with further hearings, both the creditors and Chandra’s representatives will have the opportunity to present additional evidence and arguments. The outcome will have significant implications for the broader use of personal guarantees in corporate financing and for the recovery prospects of lenders holding large claims against high‑profile guarantors.
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