Zee Entertainment Enterprises Ltd. (ZEEL) chairman emeritus Subhash Chandra was admitted into personal insolvency by the National Company Law Tribunal (NCLT) on Monday in response to a plea from Indiabulls Housing Finance regarding guarantees provided to a business named Vivek Infracon.
Delhi Tribunal dismisses the arguments made by Axis Bank and IDBI Trusteeship in Chandra’s bankruptcy case
Axis Bank and IDBI Trusteeship both had their arguments against Chandra’s admission of personal insolvency rejected by the Delhi tribunal concurrently.
Therefore, since Chandra was placed under moratorium, no legal action may be taken against him, and he is not allowed to sell or alienate any of his possessions. The people who want to recover money from him will file their claims with the resolution professional (RP), who will be assigned to handle them.
Indiabulls Housing Finance (IBHF) filed a plea in 2022 to file for personal bankruptcy against Subhash Chandra following the non-performance of a ₹170 crore loan given to Vivek Infracon.
In reply, Chandra disputed the NCLT’s authority to decide whether a person is insolvent. On May 30, 2022, however, the NCLT declared that it possesses the authority to decide Chandra’s insolvency and designated a resolution specialist to evaluate Indiabulls’ application.
Indiabulls Housing Finance Revives Chandra’s Personal Insolvency Plea Amidst Legal Challenges
Chandra then appealed the NCLT’s ruling to the National Company Law Appellate Tribunal (NCLAT), which dismissed the case following Indiabulls’ announcement of the dispute’s resolution.
A number of writ petitions challenging the legality of specific provisions of the Insolvency and Bankruptcy Code (IBC) for denying guarantors a chance to present their case resulted in the Supreme Court imposing a stay on personal guarantee insolvency at the same time.
The personal insolvency plea was brought up again in February 2024 by Indiabulls Housing Finance, which had claimed that a settlement with Chandra had been reached but had not materialized even after months.
The Supreme Court’s November 2023 ruling, which maintained the legality of these provisions and gave businesses a clear way to bring back cases against personal guarantors, was also cited by Indiabulls Housing Finance.
A personal guarantor is someone who certifies in writing to a lender that a business will pay back the loan or credit facility it has been granted. The lender may seize his personal assets if the company fails to repay the loan or credit facility.
The government added new provisions to the IBC in 2019 that allowed a creditor or a company’s registered proprietor to file an application to enforce personal guarantees under the IBC. For example, after a company is accepted into the insolvency resolution process and its promoter has provided a personal guarantee to its lenders, the lenders have the option to file an insolvency plea against the promoter directly or through the RP.
