The National Company Law Appellate Tribunal (NCLAT) has issued notices to creditors in a plea filed by Essel Group Chairman Subhash Chandra challenging proceedings related to his personal insolvency case. The appellate tribunal has scheduled the matter for further hearing on October 29 and 30.

The proceedings follow a dispute over a repayment plan approved during Chandra’s personal insolvency process and subsequent challenges by financial creditors. The case has moved through multiple stages before the National Company Law Tribunal (NCLT) and NCLAT.

Subhash Chandra Insolvency Case Moves Forward

The latest NCLAT proceedings concern Chandra’s challenge to aspects of the insolvency process and the decisions taken by the NCLT. Notices have now been issued to the creditors involved in the matter, giving them an opportunity to respond to the plea.

The dispute centres on a repayment proposal under which creditors were set to receive around ₹6.25 crore from Chandra’s personal estate, while admitted claims in the proceedings were reported at approximately ₹22,006 crore.

Chandra has previously disputed the way the larger claims figure has been presented. He has maintained that the claims relate to personal guarantees provided for borrowings by companies associated with the Essel Group rather than money personally borrowed by him.

Creditors Challenge Repayment Plan

Several financial institutions have opposed aspects of the repayment plan and moved against the NCLT proceedings. Lenders including LIC Housing Finance, Canara Bank and Union Bank of India had sought to challenge the approval of the proposal before the appellate tribunal.

The repayment plan had earlier received support from creditors representing a substantial portion of the voting value. However, dissenting lenders raised questions concerning the recovery available to creditors and the voting process.

The NCLT had initially approved the repayment proposal in August. The matter subsequently became subject to further legal proceedings after questions emerged over the tribunal’s earlier orders and the positions taken by different members.

NCLT Proceedings Complicate Insolvency Resolution

In September, a five-member special bench of the NCLT found that the earlier proceedings did not produce a clear majority view. The tribunal stayed the effect of the relevant order and directed that Chandra should not alienate his assets directly or indirectly.

The NCLT’s intervention added another layer to the ongoing dispute, with the repayment proposal and the treatment of creditors remaining under judicial consideration.

The case illustrates the legal complexities surrounding personal insolvency proceedings involving individuals who have provided personal guarantees for corporate borrowing.

NCLAT Hearing Scheduled for October

With notices now issued to creditors, the NCLAT proceedings will allow the parties to present their respective positions before the appellate tribunal.

The next hearings are scheduled for October 29 and 30. The outcome will determine the next stage of the dispute concerning Chandra’s personal insolvency proceedings and the repayment proposal.

Source: Business Standard — “NCLAT issues notices to creditors on Subhash Chandra’s insolvency plea