NCLT Approves Subhash Chandra Settlement: ₹22,006 Crore Debt Cut to ₹6.5 Crore

India’s bankruptcy court has approved a resolution plan allowing Zee Media founder Subhash Chandra to pay ₹6.5 crore against ₹22,006.57 crore in admitted creditor claims. The National Company Law Tribunal ruling on August 25 forces lenders to accept a 99.97% haircut. The decision has triggered political outcry and legal challenges from major banks, raising concerns about fairness in India’s insolvency system.

How the NCLT approved the controversial settlement

NCLT Member Nilesh Sharma approved the repayment plan on August 25 after 80.814% of creditors voted in favor. Sharma was appointed as a third member after two other judges disagreed on the case. The tribunal rejected objections from dissenting creditors led by LIC Housing Finance, which argued the payout was unviable and unlawful. The order required exclusion of certain creditor claims filed through intermediaries before the plan takes effect.

Banks face massive losses and consider appeals

HDFC Bank said only 3.2% of its ₹680 crore total claim has been admitted under the NCLT order. The bank opposed the resolution and is exploring an appeal to the National Company Law Appellate Tribunal. Other lenders including State Bank of India and Punjab National Bank also face steep losses on their claims.

Political backlash and fairness concerns

Congress leader Rahul Gandhi accused the Modi government of creating two systems for billionaires versus ordinary citizens. Congress general secretary Jairam Ramesh called the settlement a mundan, not a haircut, saying it mocked the Insolvency and Bankruptcy Code. Fugitive businessman Vijay Mallya sarcastically congratulated Chandra, questioning inconsistent treatment of defaulters.

Chandra’s defense and asset claims

Subhash Chandra’s office stated he is only a personal guarantor, not a borrower. The statement claimed his total assets were ₹39.08 crore in 2016 and ₹31.79 crore in 2024, including one residential house worth ₹25 crore. Chandra said he paid employee salaries from his personal account when borrowing companies could not, reducing his net worth. The borrowing entities have repaid ₹43,000 crore to date, according to his office.

Final Thoughts

The NCLT ruling exposes deep tensions in India’s insolvency framework. With HDFC Bank and others exploring appeals and political parties demanding accountability, the case will likely test whether such extreme haircuts can survive appellate scrutiny.

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