The National Company Law Tribunal (NCLT) has cleared a repayment proposal for Zee Group founder that would allow creditors to recover around ₹6.5 crore against admitted claims of ₹22,006.57 crore.
The approval effectively leaves lenders facing a 99.97% haircut, meaning they would recover only about three paise for every ₹100 they are owed. It has drawn attention because of the exceptionally large gap between the amount claimed by creditors and the amount they are expected to recover.
Why is the recovery so low?
The repayment proposal was approved after a split decision by two members. The matter was subsequently referred to Nilesh Sharma, a third member appointed by the NCLT president. Sharma approved the plan under Section 114 of the Insolvency and Bankruptcy Code (IBC).
Not all creditors agreed with the proposal. LIC Housing Finance, which had an admitted claim of around ₹1,322.39 crore, was offered only about ₹38 lakh. According to the , the lender described the proposal as “unviable and unlawful”.
Despite such objections, the plan received the backing of creditors holding 80.81% of the voting share. Those opposing it accounted for less than 20%.
The tribunal held that it could not replace the commercial decision of the majority of creditors with its own view of whether the recovery was sufficient.
Why did the NCLT approve the plan?
The tribunal considered more than just the huge difference between the creditors’ claims and the proposed payout.
It examined the value of Chandra’s personal assets and found that they were considerably lower than the amount offered under the repayment plan.
The NCLT also considered the possible outcome if the plan was rejected and Chandra was instead pushed into bankruptcy. In such a situation, creditors could potentially recover even less from his assets.
The central question, therefore, was whether rejecting the ₹6.5 crore proposal would give creditors a better outcome. The tribunal concluded that there was little indication that it would.
What does the 99.97% haircut mean?
The admitted claims in the insolvency proceedings total ₹22,006.57 crore, while the repayment plan provides for a payout of around ₹6.5 crore.
That means creditors are recovering only a tiny fraction of the amount they claimed. On a simple comparison, the approved payout works out to roughly three paise for every ₹100 owed.
The approval does not mean that the remaining amount will subsequently be paid to creditors under the same arrangement. The plan determines the recovery available to creditors through the insolvency process.
Why did the creditors’ vote matter?
Under the IBC framework, the commercial decision of creditors carries significant weight.
In Chandra’s case, creditors representing 80.81% of the voting share backed the repayment proposal. Since the opposing lenders represented less than 20%, the tribunal said it could not simply substitute its own assessment for that of the majority.
The NCLT’s role, in this context, was supervisory rather than to determine what it considered the ideal commercial recovery for lenders.
The approved plan will apply to creditors covered by the insolvency process, including those that had opposed it.
How did the insolvency case begin?
The proceedings trace back to a ₹170-crore loan taken by Vivek Infracon. Chandra had given a personal guarantee for the borrowing.
After the loan turned bad, Indiabulls Housing Finance initiated insolvency proceedings against Chandra in 2022. The NCLT subsequently admitted the personal insolvency case in April 2024.
Indiabulls Housing Finance was renamed Sammaan Capital in 2024. An earlier attempt to settle the dispute did not ultimately materialise.
The proceedings were revived in February 2024 after the Supreme Court upheld the relevant provisions of the IBC in November 2023.
The decision has also raised questions about how far the principle of creditors’ “commercial wisdom” should extend, particularly when a resolution plan involves an exceptionally steep haircut.
The case will now return to the original division bench, which is expected to issue the formal order reflecting the majority view.