Essel Group founder Subhash Chandra has suffered a setback in his personal insolvency proceedings after a five-member Special Bench of the National Company Law Tribunal (NCLT) stayed an order approving a repayment plan under which he was required to pay ₹6.25 crore against admitted claims of ₹22,006.57 crore.
The stay was imposed on Tuesday on the August 25, 2026 order passed by a single-member Bench of the tribunal. Under the repayment plan approved by creditors, Chandra was to make a payment of ₹6.25 crore from his personal estate against the total admitted claims of ₹22,006.57 crore. Creditors representing 80.814% of the voting share had supported the plan.
However, dissenting banks and financial institutions had opposed the proposal, pointing to a haircut of more than 99% on their admitted claims. The five-member Bench has now stayed the August 25 order and issued notices to the parties, seeking their responses. The matter will next be heard on September 23.
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Split Verdict Led to Constitution of Larger Bench
The dispute over the repayment plan arose after a two-member NCLT Bench in New Delhi delivered a split verdict in September 2025. Judicial Member Ashok Kumar Bhardwaj and Technical Member Reena Sinha Puri differed on whether the repayment plan should be approved.
Nilesh Sharma was subsequently appointed as the third member to resolve the deadlock. On August 25, 2026, Sharma supported the repayment plan approved by creditors holding 80.814% of the voting share.
However, when the matter returned to the original two-member Bench, it observed that the third member had consciously passed an independent order instead of concurring with either of the earlier opinions. As a result, there was no clear majority view.
The matter was consequently referred to the NCLT President, who constituted the five-member Special Bench on August 31, 2026.
The Special Bench comprises President Justice (Retd.) Anupinder Singh Grewal, Judicial Members Bachu Venkat Balaram Das and Mahendra Khandelwal, and Technical Members Atul Chaturvedi and Ravindra Chaturvedi.
Chandra Barred From Disposing of Assets
The Special Bench also issued notices to the parties and assured them that they would be heard at length before a final decision is taken on the repayment plan.
Meanwhile, dissenting creditors, including LIC Housing Finance and Union Bank of India, have challenged the approval of the repayment plan before the National Company Law Appellate Tribunal (NCLAT).
Appearing for the creditors before the Special Bench, Solicitor General Tushar Mehta sought an order restraining Chandra from disposing of any property directly or indirectly during the pendency of the proceedings.
The Special Bench accepted the request and directed that Chandra, in his capacity as personal guarantor, shall not alienate any assets either directly or indirectly while the matter remains pending.
₹1,322-Crore Claim Reduced to ₹38.09 Lakh Payment
Dissenting creditors have primarily objected to the steep reduction in their expected recovery under the repayment plan.
LIC Housing Finance has an admitted claim of ₹1,322.39 crore. Under the approved plan, however, it was proposed to receive only ₹38.09 lakh, representing approximately 0.028% of its admitted dues.
LIC Housing Finance had described the repayment terms as unviable and unlawful and questioned whether Chandra’s financial position and assets had been adequately examined. Creditors had also sought a forensic investigation into his financial affairs.
The August 25 order approving the repayment plan had concluded that the proposal could provide creditors with a better outcome than initiating bankruptcy proceedings against Chandra. The tribunal had also observed that once creditors approve a repayment plan in accordance with the Insolvency and Bankruptcy Code, the tribunal would ordinarily defer to their commercial judgment.
Insolvency Proceedings Began in 2024
The insolvency proceedings against Chandra began in 2024 after Indiabulls Housing Finance approached the NCLT to enforce personal guarantees provided by him for loans taken by entities linked to the Essel Group.
The proceedings concern Chandra’s liability as a personal guarantor and are separate from insolvency cases involving Essel Group companies and regulatory proceedings concerning Zee Entertainment Enterprises.
On August 30, 2026, Chandra said that the borrowers whose loans were backed by his personal guarantees had assured him that they would reconcile their accounts with lenders and clear outstanding dues of ₹4,262 crore.
The latest order has temporarily halted the ₹6.25-crore repayment plan and placed restrictions on Chandra’s ability to deal with his assets. The proceedings also highlight the wider challenges involved in recovering large outstanding amounts through personal guarantees when the guarantor’s assets are significantly lower than the claims raised by lenders.
