Subhash Chandra NCLT Order: 99.97% Haircut Doesn't Mean Loss On Rs 22,000 Cr, Say Govt Sources

Government sources have clarified that reports suggesting banks have taken a 99.97% haircut on more than Rs 22,000 crore of loans linked to Essel Group founder Subhash Chandra are “misleading”.

The clarification comes amid widespread criticism that the NCLT order effectively resulted in banks writing off almost the entire Rs 22,000 crore.

According to the clarification, the Rs 22,006 crore figure represents claims admitted against Chandra in his capacity as a personal guarantor for debts borrowed by several Essel/Zee-linked companies. It does not represent Rs 22,006 crore personally borrowed by Chandra.

Only around Rs 2,574 crore of the claims relate to loans where Chandra's personal guarantee was provided at the time of the original borrowing. Most other guarantees were provided subsequently as additional security.

The insolvency proceedings are against Chandra as a personal guarantor and not against the principal corporate borrowers. The proceedings followed a default on a loan to Vivek Infracon from Indiabulls for which Chandra had provided a personal guarantee.

The sources have therefore stressed that the reported 99.97% haircut is not a 99.97% loss on Rs 22,000 crore of bank loans. It relates specifically to the claims recoverable from Chandra personally. The repayment approved from his personal estate is around Rs 6.25 crore.

Principal borrowers still liable

Importantly, the principal borrowers remain separately liable. The repayment plan envisages around Rs 1,494 crore of payments by the principal borrowers, in addition to the Rs 6.25 crore from Chandra personally.

Creditors also retain recovery rights against securities and other available assets of the companies.

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Creditors questioned Chandra's assets

The Rs 6.25 crore personal recovery reflects the assets currently available or realisable from Chandra's estate. Creditors had challenged this position and sought deeper scrutiny of his assets.

Creditors questioned Chandra's current disclosed net worth of around ₹31.79 crore, citing historical net-worth certificates showing Rs 45,888 crore in 2017 and Rs 40,562 crore in 2018.

They sought greater scrutiny of the significant change in the reported net worth and the assets available to meet his personal-guarantor liability.

Plan had 80.81% creditor support

The repayment plan was approved with 80.81% voting support from creditors and was not imposed unilaterally by the NCLT.

Several lenders, including LIC Housing Finance, HDFC Bank, Axis Bank, Canara Bank, RBL Bank and Union Bank, opposed the plan. The NCLT, however, held that the objections were insufficient to overturn the creditor-approved plan.

Creditors will continue to pursue recovery from the principal borrowers, securities and other available assets even after settlement of Chandra's personal-guarantor liability.

Case not representative of IBC recoveries

The government sources also stressed that the Subhash Chandra matter is an exceptional personal-guarantor resolution and should not be seen as representative of corporate insolvency recoveries under the Insolvency and Bankruptcy Code.

Creditors have recovered around Rs 4.32 lakh crore through approved resolution plans up to March 2026, with recoveries at 116.85% of liquidation value and 94.56% of fair value.

More than 32,000 cases have been settled before admission into insolvency proceedings since the introduction of IBC, involving assets worth around Rs 14 lakh crore.

The sources have also highlighted the improvement in banking-sector asset quality, with net NPAs of scheduled commercial banks falling from 5.94% in March 2018 to 0.48% in September 2025. In absolute terms, net NPAs declined from around Rs 5.2 lakh crore to Rs 0.94 lakh crore.

Citing An IIM Ahmedabad Study

Sources said that it found that companies resolved under IBC recorded 76% growth in sales, 50% growth in total assets, 50% growth in employee expenses and 130% growth in capital expenditure.

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