The National Company Law Tribunal has formed a five-member bench to resolve a deadlock in the personal insolvency case of Essel Group Chairman Subhash Chandra. The case centers on a controversial plan proposing a 99.97% haircut on Rs 22,006 crore in admitted debt, leaving creditors facing a near-total loss on their claims.
The legal battle over the personal insolvency of Essel Group Chairman Subhash Chandra has entered a new phase as the National Company Law Tribunal (NCLT) struggles to reach a final decision. A two-member bench at the tribunal failed to achieve a majority consensus on a repayment proposal that would see creditors recover only a fraction of their dues. With the deadlock unresolved, the NCLT President has now constituted a special five-member bench to hear the matter afresh, starting September 1, 2026.
At the center of this dispute is a repayment plan that suggests a payout of approximately Rs 6.5 crore against total admitted claims of Rs 22,006 crore. In financial terms, this effectively represents a 99.97% haircut—meaning creditors would effectively lose almost everything they are owed. Subhash Chandra has maintained that he does not have personal debt in the traditional sense, arguing that the Rs 22,000 crore figure relates to his role as a personal guarantor for debts linked to Essel and Zee-related entities.
The procedural impasse arose after the original two-member bench—comprising a judicial member and a technical member—could not agree on whether the plan was legally valid. When a third member was brought in to break the tie, they introduced a different legal interpretation that did not align with either of the initial members. Because the tribunal could not arrive at a majority verdict, the case was referred back to the NCLT leadership, leading to the formation of the larger special bench.
The situation has raised significant questions regarding the enforcement of personal guarantees under the Insolvency and Bankruptcy Code (IBC). Major lenders, including LIC Housing Finance and HDFC Bank, have strongly opposed the proposal, arguing it is neither fair nor viable. These creditors have also approached the National Company Law Appellate Tribunal (NCLAT) to challenge the proceedings.
For investors and the broader banking sector, this case serves as an important test of how the law treats personal guarantors. If a repayment plan offering such a minimal recovery is eventually approved, it could create a precedent for how banks and financial institutions evaluate the protection offered by personal guarantees from promoters. The outcome will likely influence how lenders approach recovery in other high-profile debt cases where promoters have provided personal security. The next important update for stakeholders will be the proceedings scheduled before the special five-member bench.