New Delhi — Reports claiming that banks took a 99.97% haircut on more than Rs 22,000 crore in loans linked to Essel Group founder Subhash Chandra after a National Company Law Tribunal order have mischaracterized the nature of the insolvency proceedings, according to government sources.
The Rs 22,006 crore figure cited in reports represents the total claims admitted against Chandra in his capacity as a personal guarantor for debts borrowed by several Essel and Zee-linked companies. It does not represent money personally borrowed by Chandra.
Government sources said about Rs 2,574 crore of the admitted claims relate to loans for which Chandra provided a personal guarantee when the loans were originally issued. Many of the remaining guarantees were provided later as additional security.
As a result, the Rs 22,006 crore in admitted claims should not be treated as Rs 22,006 crore originally lent on the basis of Chandra’s personal guarantee, the sources said.
The insolvency proceeding also applies specifically to Chandra as a personal guarantor rather than to the companies that originally borrowed the money. The case arose after Chandra provided a personal guarantee for a loan from Indiabulls to Vivek Infracon. Following a default, insolvency proceedings were initiated against him as guarantor.
The widely reported 99.97% haircut therefore represents the reduction in claims recoverable directly from Chandra, rather than a 99.97% loss on Rs 22,000 crore in bank loans.
Under the approved repayment plan, about Rs 6.25 crore will be recovered from Chandra’s personal estate. The principal corporate borrowers remain liable for their debts.
The plan also anticipates approximately Rs 1,494 crore in payments from the principal borrowers, in addition to the amount recovered personally from Chandra. Creditors can continue pursuing securities and other assets belonging to the companies.
Sources also cited a statement from Chandra claiming that companies connected to the debts have already paid Rs 43,000 crore to creditors.
The relatively small recovery from Chandra reflects the assets currently identified as available or realizable from his personal estate. Creditors challenged that assessment, pointing to historical net-worth certificates that listed his net worth at Rs 45,888 crore in 2017 and Rs 40,562 crore in 2018, compared with a currently disclosed net worth of Rs 31.79 crore.
Some creditors sought additional scrutiny of his assets.
The repayment plan was approved with 80.81% support from creditors rather than being imposed solely by the NCLT. LIC Housing Finance, HDFC Bank, Axis Bank, Canara Bank, RBL Bank and Union Bank were among the lenders that opposed the plan.
The tribunal, however, found that their objections were not sufficient to overturn a plan approved by the required majority of creditors.
Creditors will continue to have avenues to recover money from the principal borrowers, pledged securities and other available corporate assets even after Chandra’s personal-guarantor liability is resolved.
Government sources described the case as an unusual personal-guarantor resolution that should not be viewed as representative of recoveries under India’s broader Insolvency and Bankruptcy Code.
Through March 2026, creditors had recovered about Rs 4.32 lakh crore through approved resolution plans under the IBC. Recoveries amounted to 116.85% of liquidation value and 94.56% of fair value.
More than 32,000 cases have also been settled before formal admission into the insolvency process since the IBC was introduced, involving assets worth roughly Rs 14 lakh crore.
Bank asset quality has improved significantly during the same period. Net non-performing assets at scheduled commercial banks declined from 5.94% in March 2018 to 0.48% by September 2025, while the absolute amount fell from about Rs 5.2 lakh crore to Rs 0.94 lakh crore.
An Indian Institute of Management Ahmedabad study of companies that went through resolution found that the firms subsequently recorded 76% growth in sales and 50% growth in total assets. Employee expenses increased 50%, while capital expenditure rose 130%, according to the study. (Source: IANS)
