NCLT Special Bench Reviews Rs 6.25-Crore Repayment Plan In Personal Insolvency Case

New Delhi, Sept 1 (KNN) The National Company Law Tribunal (NCLT) on Tuesday stayed an August 25 order approving a Rs 6.25-crore repayment plan proposed by Essel Group founder in personal insolvency proceedings involving admitted creditor claims of around Rs 22,006.57 crore.

Five-Member Bench Puts Repayment Plan On Hold

A five-member Special Bench headed by NCLT President Justice Anupinder Singh Grewal held that no clear majority view had emerged among the members who had earlier considered the repayment plan, making the August 25 order incapable of being given effect under Section 419(5) of the Companies Act, 2013.

The Special Bench, constituted on Monday, also comprises judicial members Bachu Venkat Balaram Das and Mahendra Khandelwal, and technical members Atul Chaturvedi and Ravindra Chaturvedi.

Tribunal Notes Conflicting Views On Creditor Recovery

The tribunal noted a split in the earlier bench over whether the repayment plan would bind all creditors or only those who approved it. One view allowed dissenting lenders to pursue separate recovery proceedings, while another held that the plan should apply to all creditors.

The Special Bench issued notices to the parties and sought their replies before conducting a detailed hearing on the repayment plan.

Essel Group Founder Restrained From Alienating Properties

Solicitor General Tushar Mehta, representing dissenting creditors including LIC Housing Finance, Canara Bank and Union Bank, sought restrictions on the disposal of properties held by the Essel Group founder.

The Special Bench subsequently restrained the founder from alienating his properties, directly or indirectly, pending further proceedings.

The repayment plan has also been challenged before the National Company Law Appellate Tribunal (NCLAT) by creditors opposing its approval.

Personal Insolvency Proceedings Began In 2024

The personal insolvency proceedings against the Essel Group founder were initiated in 2024 following a petition by Indiabulls Housing Finance and relate to personal guarantees provided for borrowings of Essel Group-linked companies.

Rs 6.25-Crore Plan Against Rs 22,006.57-Crore Claims

Under the proposed plan, the founder would contribute around Rs 6.25 crore from his personal estate against admitted creditor claims of approximately Rs 22,006.57 crore.

The plan received 80.814 per cent of the voting share, while creditors opposing it accounted for 19.186 per cent.

Dissenting creditors have questioned the level of recovery under the plan and whether the founder’s financial position and assets were adequately examined, including whether a forensic investigation was warranted.

NCLT Had Approved Plan On August 25

The NCLT had approved the repayment plan on August 25, observing that it could provide creditors a better outcome than bankruptcy and that the tribunal would generally defer to creditors’ commercial decisions where a plan complies with the Insolvency and Bankruptcy Code.

The latest order keeps the approval in abeyance as the five-member Special Bench examines the conflicting views and legal issues surrounding the repayment plan.

(KNN Bureau)