New Delhi: A newly constituted five-member bench of the National Company Law Tribunal (NCLT), Delhi, has stayed the approval of a repayment plan proposed by Essel Group founder Dr. Subhash Chandra.

Under the proposed plan, creditors were to receive ₹6.25 crore against admitted claims amounting to ₹22,006.57 crore. The bench has also restrained Chandra from directly or indirectly dealing with or transferring his properties.

₹6.25 Crore Repayment Against ₹22,006 Crore Claims

The repayment proposal offered ₹6.25 crore to creditors, along with ₹25 lakh towards insolvency process costs.

The admitted claims, however, stood at ₹22,006.57 crore, meaning the proposal involved a haircut of nearly 99.9 per cent.

Despite the massive difference between the admitted claims and the proposed repayment, creditors representing 80.814 per cent of the voting share had voted in favour of the plan.

NCLT Restrains Property Transfer

The five-member bench also issued a significant direction restricting Subhash Chandra from alienating his properties.

The order came after Solicitor General Tushar Mehta, appearing for the creditors, sought protection against the alienation of the guarantor’s assets.

The tribunal directed that the guarantor would not be permitted to alienate his properties either directly or indirectly. Notices have also been issued to the parties concerned.

Why Was the Matter Referred to a Larger Bench?

The case reached the five-member bench after the original two-member NCLT bench failed to arrive at a majority opinion on the validity and scope of the repayment plan under the Insolvency and Bankruptcy Code, 2016.

Judicial Member Ashok Kumar Bhardwaj had supported approval of the plan, while Technical Member Reena Sinha Puri had rejected it.

The matter was subsequently placed before Judicial Member Nilesh Sharma. In an order dated August 25, Sharma favoured approval of the repayment plan, observing that the statutory voting threshold had been met.

However, the matter returned to the larger bench after the original members noted that the third member had passed an independent order instead of resolving the specific points of disagreement between them.

Case Before NCLT

The matter is titled Indiabulls Housing Finance Limited vs Dr Subhash Chandra, bearing Case No. IB-97/ND/2022.

The latest order by the five-member NCLT bench has now put the approval of the repayment plan on hold while also protecting the guarantor’s assets from direct or indirect transfer.