Subhash Chandra disputes ₹22,000 cr insolvency claims, says lenders’ claims are ₹3,992 cr

Essel Group founder Subhash Chandra on Thursday disputed media reports on his personal insolvency proceedings before the National Company Law Tribunal (NCLT), saying the ₹22,006 crore figure being reported represents historical claims filed in the case and does not reflect the current position.

In a statement issued from his office, Chandra said he had not personally borrowed money from the lenders involved in the proceedings and had acted only as a personal guarantor for loans raised by companies associated with the Essel Group. 

He said the claims of lenders that have objected to the repayment plan currently amount to ₹3,992 crore, of which ₹620 crore has already been settled and a further amount of about ₹1,113 crore has been offered by the borrowing entities to multiple lenders.

Chandra's statement comes days after reports on the NCLT proceedings highlighted the large gap between the claims admitted in his personal insolvency case and the amount proposed to be paid under the resolution plan.

He said the proceedings, which have been pending since February 2022, have involved several sets of claims and that figures quoted in recent reports were drawn from documents showing claims filed at an earlier stage rather than the current status of liabilities.

“The numbers being quoted in the reports as judgement are taken from the documents as total claims filed. It does not represent the current status,” Chandra said in the statement. He also said the matter remained technically pending before the NCLT as the judge's opinion was yet to be converted into a final order.

Chandra says he was a guarantor, not a borrower

According to Chandra, the insolvency proceedings relate to personal guarantees he provided to lenders for borrowing by companies that were associated with the Essel Group. He stressed that he had not undertaken personal borrowing from the creditors named in the proceedings.

He said most of the personal guarantees were signed after January 24, 2019, when the group had already defaulted in the financial system. According to his statement, lenders subsequently approached him to provide guarantees, citing concerns about the potential impact on employees, and he agreed after the borrowing companies assured him that the loans would ultimately be repaid.

Chandra said the total outstanding borrowings of the companies stood at close to ₹45,000 crore as of January 24, 2019. Of this, the borrowing entities have since repaid close to ₹43,000 crore, he said.

The total value of guarantees signed by Chandra was approximately ₹22,000 crore, while creditors subsequently filed claims totalling ₹22,006 crore in the personal insolvency proceedings. Of these, ₹21,696 crore was admitted by the resolution professional, according to the statement.

Resolution plan received 80.8% approval

Chandra said the repayment plan placed before creditors received approval from 80.814% of creditors when it was put to vote by the resolution professional.

He said some financial creditors subsequently challenged the plan before the NCLT and that other lenders later joined the group of objectors.

The statement divides the lenders involved in the proceedings into two broad groups: those that have objected to the repayment plan and those that have either accepted it or have not filed objections.

The first group, according to Chandra, represents 19.251% of total claims and had filed claims amounting to ₹3,992 crore. Of this amount, claims worth ₹620 crore have been settled, leaving ₹3,372 crore.

Chandra's statement says the borrowing entities admitted only ₹1,033 crore of these claims, while disputing the remainder. The resolution professional, however, rejected those disputes.

According to figures attributed to the borrowing companies, lenders in this group had originally released ₹2,856 crore, of which ₹1,633 crore had been repaid, leaving a balance of ₹1,223 crore. Against this, lenders had claimed ₹3,992 crore.

The borrowing entities have offered to pay approximately ₹1,113 crore to multiple lenders in this group, Chandra said. Of that amount, ₹620 crore has already been settled, while discussions on the remaining amount are continuing.

₹16,200 crore claims relate to other lenders

The second group consists of lenders that have either accepted the repayment plan or have not filed objections against it.

Chandra said these lenders had filed claims totalling ₹16,386 crore at the time of filing, of which ₹16,201 crore was admitted by the resolution professional.

The borrowing companies have also disputed claims made by this group of lenders, but the resolution professional did not accept those disputes, according to the statement.

Chandra said the borrowing entities are in the process of settling the remaining amounts owed to these lenders as well. He said this commitment by the borrowing companies formed part of the plan approved by the NCLT, but was not reflected in some of the recent media reports.

The statement therefore seeks to distinguish between the gross claims admitted during the insolvency process and the amounts that remain subject to settlement by the original borrowing companies.

Dispute over Chandra's net worth

Chandra also challenged claims regarding his personal net worth that have featured in the insolvency proceedings.

According to his statement, one lender had claimed that his net worth was ₹45,888 crore in 2017. Chandra disputed this figure, saying the amount allegedly represented the combined market capitalisation of Essel Group companies rather than his personal wealth.

He said his declared assets were ₹39.08 crore in 2016, based on a declaration made to Parliament, and questioned how a figure of ₹45,888 crore could subsequently have been treated as his personal net worth.

The statement said his net worth had fallen to ₹31.79 crore in 2024. Chandra attributed part of the decline to payments he made personally, including salaries of employees when the borrowing companies were unable to make those payments.

His current assets, according to the statement, include a residential property valued at close to ₹25 crore.

Chandra said the ₹6.5 crore repayment plan was arrived at based on his ability to pay from his personal assets.

The 2019 turning point

The press release also reproduced an open letter Chandra issued on January 24, 2019, when the financial stress within the group had intensified.

In that letter, Chandra acknowledged mistakes in the group's business decisions and apologised to lenders, including banks, NBFCs and mutual funds. He said the group had faced difficulties after several business bets failed and borrowing costs increased.

He specifically referred to losses in infrastructure projects and the acquisition of Videocon's D2H business as factors that had affected his finances.

Chandra also said that, following the separation of the family business, he had assumed responsibility for the group's debts with the expectation that he would be able to earn and repay creditors. The subsequent failure of several new businesses, coupled with rising interest costs, made the situation increasingly difficult, he said.

He also pointed to the IL&FS crisis as a major turning point, saying that the collapse affected the ability of companies to roll over borrowings and consequently weakened their ability to service debt.