The Congress on Thursday took a swipe over the insolvency tribunal NCLT clearing businessman Subhash Chandra’s Rs 6.5 crore payout to settle Rs 22,006 crore dues, saying this is not just a haircut but a “mundan” that makes a “complete mockery” of the Insolvency and Bankruptcy Code, 2016.
There was no immediate reaction from Chandra or his group.
The insolvency tribunal NCLT has approved a repayment plan under which the media baron will pay just Rs 6.5 crore to settle admitted creditor claims of about Rs 22,006.57 crore in his personal insolvency resolution process, translating into a haircut of nearly 99.97 per cent for lenders.
NCLT Member (Judicial) Nilesh Sharma, ruling as a third member, on Tuesday approved the plan under Section 114 of the Insolvency and Bankruptcy Code (IBC), rejecting objections by lenders that the recovery was too meagre to merit approval.
Reacting to the development, Jairam Ramesh said, “In finance terminology, when creditors are owed money and the debtor repays only part of it, the difference expressed as a percentage is called a haircut.”
The National Company Law Tribunal has just approved a repayment plan of a noted businessman under which creditors will receive only Rs 6.5 crore against admitted claims of around Rs 22,006.57 crore, he said in an obvious reference to Chandra.
“This is not just a haircut. It is actually a mundan and makes a completely mockery of the Insolvency and Bankruptcy Code, 2016,” Ramesh said on X.
Earlier, the two members of the National Company Law Tribunal had given a split verdict, after which the president of the forum appointed Sharma as the third member amid the difference of opinion.
Sharma rejected the claims of the dissenting creditors led by LIC Housing Finance, which had argued that the payout was “unviable and unlawful”.
It had contended that against admitted claims of approximately Rs 22,006.57 crore, the repayment plan proposed the payment of only Rs 6.25 crore to creditors and Rs 25 lakhs towards process costs.
“In the case of LICHFL, whose admitted claim stood at Rs 1,322.39 crore, the proposed repayment was merely Rs 38,09,294, amounting to approximately 0.028 per cent of its admitted dues. It was contended that such a negligible repayment could not receive the approval of this tribunal,” said the NCLT order recording its submission.
Further, the repayment plan itself treated even the proposed amount of Rs 6.5 crore as merely indicative and not certain, rendering the plan tentative, non-definitive, and incapable of approval.
However, the NCLT held that the objecting creditors together held less than 20 per cent of the voting share, while the plan had been approved by the required number of vote shares — 80.81 per cent share.
Sharma, in its 144-page-long order, said the resolution professional’s valuation showed Chandra’s personal estate was worth significantly less than the amount offered under the plan, and that dissenting creditors were unlikely to recover more by rejecting it, since he would then face bankruptcy rather than being able to pay from a position of financial recovery.
“If the plan is approved and the debtor’s insolvency is resolved, putting him back on his feet, the objectors would ultimately stand a better chance of recovering their debts directly from the Principal Debtors,” the NCLT observed.
The tribunal held that its role was not to substitute its own commercial wisdom for that of the creditors or to assess whether the settlement amount was adequate.
