Zee founder Subhash Chandra’s personal insolvency plan offers creditors a recovery of just 0.03, while Vijay Mallya questions India’s debt-resolution system
The National Company Law Tribunal (NCLT) has approved a repayment plan for Zee Group founder Subhash Chandra under which creditors will receive Rs 6.5 crore against admitted claims of Rs 22,006.57 crore. The settlement translates into a recovery of just around 0.03 per cent for lenders and a massive 99.97 per cent haircut on their claims.
The decision was taken by NCLT Member (Judicial) Nilesh Sharma, who was appointed as the third member after the original two-member bench delivered a split verdict on Chandra’s repayment plan.
Under the proposal, Rs 6.25 crore will be distributed among creditors, while another Rs 25 lakh has been earmarked towards the costs of the insolvency process. The plan received support from creditors representing 80.81 per cent of the voting share.
Several lenders, led by LIC Housing Finance, had opposed the proposal, arguing that the recovery was too small to justify approval. LIC Housing Finance, which had an admitted claim of Rs 1,322.39 crore, was proposed to receive only about ₹38.09 lakh — roughly 0.028 per cent of its admitted dues.
The tribunal, however, held that it could not substitute its own assessment for the commercial decision of the required majority of creditors. It noted that the valuation of Chandra’s personal assets indicated that rejecting the plan was unlikely to result in a better recovery for dissenting creditors.
More from BusinessThe NCLT also said the approved repayment plan would be binding on all creditors, including those who voted against it, under Section 115 of the Insolvency and Bankruptcy Code.
Vijay Mallya reacts
The unusually steep haircut has also triggered a reaction from businessman Vijay Mallya, who used the development to question what he described as inconsistencies in India’s debt-resolution process.
In a post on X, Mallya referred to the Rs 6.5 crore settlement and claimed that banks and the government had acknowledged recovering Rs 14,100 crore from him against a judgement debt of Rs 6,203 crore. He contrasted his case with Chandra’s settlement and questioned whether borrowers were being treated consistently under India’s debt-resolution framework.
Mallya has previously disputed figures cited by the government and banks regarding recoveries from his assets and sought greater clarity over how those recoveries were accounted for.
The Chandra case highlights the difficult balance within India’s insolvency framework: maximising recovery for creditors while allowing a financially distressed individual to avoid bankruptcy when creditors believe an approved repayment plan offers a better outcome.
The matter will now return to the original NCLT division bench for a formal order in line with the majority view.
