NCLT Admits India Bull's insolvency plea against Subhash Chandra

22 Apr 2024 , 03:48 PM

The National Company Law Tribunal (NCLT) has admitted insolvency plea of  Indiabulls Housing Finance against Subhash Chandra, the founder of Zee.

NCLT in Delhi dismissed pleas by IDBI Trusteeship and Axis Bank against Chandra’s admission to personal insolvency.

Chandra’s admission to moratorium implies no litigation can be initiated against him, and he is prohibited from selling any assets, with a resolution professional (RP) appointed to handle claims against him.

Indiabulls Housing Finance filed the plea in 2022 after a ₹170 Crore loan to Vivek Infracon turned into non-performing assets.

Chandra contested NCLT’s jurisdiction over personal insolvency, but NCLT ruled in May 2022 to adjudicate his insolvency and appointed a resolution professional.

Chandra challenged NCLT’s decision in the National Company Law Appellate Tribunal (NCLAT), which closed the case after Indiabulls announced a settlement, but the Supreme Court stayed personal guarantee insolvency amidst writ petitions questioning the IBC’s provisions.

Indiabulls revived the case in February 2024 after failed settlement attempts, citing the Supreme Court’s November 2023 decision affirming the validity of IBC provisions, allowing reinstatement of cases against personal guarantors.

A personal guarantor assures a lender of a company’s loan repayment, and in default, their personal assets can be seized by the lender.

The 2019 amendments to the IBC enabled creditors or the RP of a company to enforce personal guarantees, allowing insolvency pleas against promoters if the company is admitted to insolvency resolution.

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