Subhash Chandra In Deep Waters as NCLT Admits Indiabulls Insolvency Plea

The National Company Law Tribunal (NCLT) has issued a notice for the commencement of insolvency proceedings against Subhash Chandra, the visionary behind Zee Entertainment Enterprises Ltd., and a diversified conglomerate called the Essel Group as a result of a plea filed by Indiabulls Housing Finance Limited (IHFL). Acting on it, a two-judge panel in Delhi declared that the case is based on Chandra’s guarantee for a loan provided to Vivek Infracon  Ltd, a company within the Essel Group.

IHFL moves to NCLT

IndiaBulls resorted to the Law Tribunal after there was a default in payment of about Rs. 170 Crores by Vivek Infracon in 2022. After the plea was filed, Chandra questioned the power of NCLT to initiate proceedings against him but later, the case was withdrawn after several discussions on settlement were floating around. However, the terms of the agreement were not met and Indiabulls did not receive any payment whatsoever from Vivek Infracon. This lack of payment likely contributed to IHFL’s decision to escalate the matter by filing a plea with the National Company Law Tribunal (NCLT), leading to Subhash Chandra’s inclusion in personal insolvency proceedings. It is being considered a personal insolvency case after the provisions of IBC were amended in 2019, allowing creditors to file directly against personal guarantors as Chandra in this case.

Impact of Insolvency Proceedings 

Insolvency proceedings can have far-reaching consequences for companies and individuals, impacting their financial stability, operations, and reputation. In this case, the initiation of proceedings means that  Chandra will be under the moratorium provision of IBC which directly restricts him from selling/disposing of any property or assets.  

Conclusion

In the wake of Chandra’s direct inclusion in the case, a Resolution Professional will likely be appointed by the insolvency tribunal to oversee the investigation, the individual’s role will involve compiling all loans and facilitating  IHFL in recovering their funds. This is going to ensure transparency and help with the recovery of funds for IHFL. 

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. It is based on several secondary sources on the internet and is subject to changes. Please consult an expert before making related decisions.