NCLT Forms Five Member Special Bench to Hear Subhash Chandra Insolvency Case

The National Company Law Tribunal (NCLT) has constituted a five member Special Bench to hear personal insolvency proceedings involving Essel Group founder Subhash Chandra. The new bench, which includes the NCLT president, two judicial members, and two technical members, is scheduled to hear the matter on September 1. This development follows a dispute over a repayment plan that would provide creditors approximately Rs 6.25 crore against guarantees totaling around Rs 22,000 crore. The proceedings were initiated in 2024 following a petition by Indiabulls Housing Finance regarding personal guarantees Chandra provided for borrowings of Essel Group linked companies. While the plan received approximately 80.8 percent support from creditors by value, several banks including HDFC Bank, Union Bank of India, and Axis Bank opposed the low recovery amount. Some creditors have since moved an urgent petition before the National Company Law Appellate Tribunal (NCLAT). The NCLT noted that a previous three member bench failed to reach a majority view on how the plan should operate, with members disagreeing on whether the plan should apply to all creditors or only those who supported it. Subhash Chandra stated on August 30 that borrowers associated with his guarantees had assured him they would settle a balance of Rs 4,262 crore. The case has raised broader questions regarding the effectiveness of personal guarantees and the limits of the personal insolvency framework when a guarantor's assets are substantially lower than their liabilities.