Despite many successful recoveries, the haircut in Mr Chandra’s case — called by the Congress as mundan (tonsure) — highlights malaise in the system. The mystery over the approval deepens further as big names in the Indian banking industry such as LIC Housing Finance, HDFC Bank, Axis Bank, Canara Bank, RBL Bank and Union Bank have opposed the plan
The National Company Law Tribunal’s approval of a Rs 6.5-crore repayment plan for Essel Group founder Subhash Chandra, which represents 0.03 per cent of the group’s overall 99.97 per cent debt or 0.25 per cent of Rs 2,574 crore loans, for which he provided a personal guarantee, has triggered a healthy public debate on the functioning of the 10-year-old Insolvency and Bankruptcy Code (IBC).
In the last 10 years, the IBC has allowed creditors to recover about Rs 4.32 lakh crore through approved resolution plans up to March 2026, with recoveries amounting to 116.85 per cent of liquidation value and 94.56 per cent of fair value. More than 32,000 cases have been settled before admission into insolvency proceedings, involving assets worth about Rs 14 lakh crore.
Despite many successful recoveries, the haircut in Mr Chandra’s case — called by the Congress as mundan (tonsure) — highlights malaise in the system. The mystery over the approval deepens further as big names in the Indian banking industry such as LIC Housing Finance, HDFC Bank, Axis Bank, Canara Bank, RBL Bank and Union Bank have opposed the plan.
The stark disparity between corporate haircuts and individual defaults threatens to dilute the fundamental deterrence the IBC was designed to create. The NCLT's acceptance of a near-total write-off at the individual level risks reducing personal guarantees to mere paper promises. Dissenting creditors argue that approving token recoveries sets a damaging precedent for ongoing high-profile resolutions and erodes credit discipline across the banking sector.
If the government is sincere in its approach towards defaulters, the Insolvency and Bankruptcy Board of India (IBBI) must conduct a comprehensive forensic tracking of global assets to scrutinise undisclosed global holdings and prevent defaulters from turning insolvency mechanisms into an escape hatch for promoters seeking clean-slate exits at the public’s expense.
