Parekh also said lenders had themselves failed to adequately track the erosion in the underlying value supporting the guarantees.
“We can’t have a situation where you go out and create a loan book of the extent that we’re talking about, and then suddenly find that the value… is only about ₹31 crore,” he said.
Anoop Rawat, National Practice Head for Restructuring and Insolvency at Shardul Amarchand Mangaldas & Co, raised a separate concern: how the National Company Law Tribunal (NCLT) arrived at its decision in the first place. “There are serious issues raised on how the resolution professional admitted certain of these claims,” Rawat said, adding that objections from banks and financial institutions on related-party guarantees were not examined in depth.
Background
The NCLT this week approved a repayment plan under which Subhash Chandra will pay about ₹6.5 crore against admitted claims of over ₹22,000 crore in his personal insolvency proceedings. That works out to a haircut of nearly 99.97% for lenders. More than 80% of voting creditors backed the plan.
Chandra issued a statement pushing back on the near-total haircut framing. He said he never personally borrowed from any lender and that the case relates only to personal guarantees he gave for loans to Essel Group companies.
Of the roughly ₹22,000 crore in total guarantees, he said only ₹3,992 crore is being actively contested by objecting lenders. Of that, about ₹620 crore has been settled, leaving a balance of ₹3,372 crore, with borrower entities offering a further ₹1,063 crore in settlement.
Chandra’s statement also said the underlying borrowing companies have repaid close to ₹43,000 crore of the roughly ₹45,000 crore they owed since a 2019 default, and have committed to settling the rest. On the contested net worth figure, cited by lenders at ₹45,888 crore, he said that number reflected the market capitalisation of all Essel Group companies and was compiled by “a third party, junior officer.”He said his personal net worth fell from ₹39 crore in 2016, a figure he had disclosed to Parliament, to about ₹31.79 crore now, which includes a residential property worth close to ₹25 crore. That leaves about ₹6.25 crore available to lenders under the approved plan.
What experts are saying
Parekh said the explanation does not erase the underlying loss. He noted that Chandra was not the borrower on the loans but the guarantor, and that a large share of the ₹45,000 crore market value cited by lenders came from the entertainment business, a separate corporate entity, whose value collapsed after the failed Sony-Zee merger. He also said lenders bear some responsibility for not tracking that value erosion as it happened.
Rawat said his concern is less about the size of the haircut and more about how the resolution process was conducted. He said the way guarantees were extended to entities allegedly linked to Chandra may not have received adequate scrutiny, and that a forensic review could have addressed the allegations more directly. He pointed out that the technical member on the NCLT bench differed from the judicial member on this point, which he said gives dissenting creditors grounds to challenge the order in a higher forum.
On whether this case sets a precedent for other promoters facing personal guarantee claims, Parekh said lenders also need to examine the underlying assets behind a guarantee at the time it is given, rather than relying on it years later when the guarantor’s net worth has fallen.
For the full interview, watch the accompanying video
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