NCLT admits Indiabulls' personal insolvency plea against Zee's Subhash Chandra: Report

The National Company Law Tribunal (NCLT) in Delhi on April 22 admitted Indiabulls Housing Finance's (IBHF) personal insolvency plea against Zee Entertainment Enterprises Limited (ZEEL) chairman emeritus Subhash Chandra over guarantees given to a company called Vivek Infracon, according to a report by moneycontrol.

The tribunal also rejected pleas by IDBI Trusteeship and Axis Bank against Chandra being admitted to personal insolvency.

IBHF claimed that while Chandra indicated of a settlement being reached in the dispute, it is yet to be fulfilled. So, they are constrained to revive the personal insolvency plea. The plea was filed under the Insolvency and Bankruptcy Code, 2016 (IBC).

IBHF had moved a petition to initiate personal insolvency against Subash Chandra in 2022 after a loan of Rs 170 crore given to Vivek Infracon turned into a non-performing asset. Chandra argued that NCLT cannot rule on an individual's insolvency.

In May 2022, the tribunal ruled that it had the powers to rule on Chandra's solvency and appointed a resolution professional to consider Indiabulls' application. However, the case lost traction after provisions relating to personal guarantee under IBC were challenged in the Supreme Court. In June 2022, the apex court asked the resolution professionals of personal guarantors not to act on their mandates.

In November 2023, it upheld the validity of these provisions making way for companies to revive cases against personal guarantors. Following this development IBHF revived its plea.

A personal guarantor is a person who gives a written assurance to a lender that a company will repay the loan/ credit facility it has obtained. In the event the company does not repay the loan/credit facility, his personal assets can be attached by the lender.