₹22,000 cr debt saga: Did not borrow any money, was only a personal guarantor, says Subhash Chandra

Essel Group founder Subhash Chandra today cleared the air on the interpretations that NCLT allowed him to walk away with a massive haircut of 99.97% on bank loan worth ₹22,000 crore, by approving a resolution plan of a mere ₹6.25 crore.  Chandra said he has not borrowed any money and is only a personal guarantor in the matter, with a claim limited to ₹3,992 crore, by the creditors objecting to the resolution plan.  

It may however be noted that the resolution matter pertains debts borrowed by several Essel/Zee-linked companies. 

What is Subhash Chandra's role in the resolution matter of Essel/Zee linked entities? 

“Dr. Chandra has not borrowed any money from any lender. Dr. Chandra is only a personal guarantor. Total claim against Dr. Subhash Chandra as a personal guarantor, in the personal insolvency proceedings is only ₹3992 crore by the objectors of the plan and not ₹22000 crores,” Chandra said in a statement today.

“Out of which, also a claim of ₹620 crores settled and further ₹1063 crores offered to be paid by the borrower entities,” he added.

“The borrowing entities for whom Dr. Chandra has provided Personal Guarantees have till date repaid ₹43000 crore. The borrowing entities have assured to settle any other amount which might have left,” Chandra’s statement said.

Sharing the details of the matter, the statement from Chandra said the total outstanding of all companies on 24th January 2019 was close to ₹45000 crore. Out of this, they have returned close to ₹43000 crores since that day.

“Total guarantees signed were for approximately ₹22000 crore. Total claims in the case in point filed were totaling ₹22006 crore and admitted ₹21696 crore. The plan was approved by 80.814% creditors when the resolution professional put it to vote. Many out of remaining 19.186% did not even vote when the voting was open for multiple days,” Chandra’s statement added.

It also points out that some of financial creditors/lenders filed objection in NCLT against the competent authority approving the plan, there after all others joined the band wagon of objectors.

“Those who are objecting the plan are only 19.251%. of total claims. They had filed total claims of ₹3992 crores,” the statement pointed out.

What is the central government's view on the case?

In fact the union government has also said that the widespread reports that banks have taken a 99.97% haircut on over ₹22,000 crore of loans to Chandra, with the National Company Law Tribunal approving repayment of only around ₹6.5 crore, are incorrect and the insolvency proceedings against Chandra is in the capacity of the personal guarantor for debt borrowed by several Essel/Zee-linked companies.

“Subhash Chandra did not personally borrow ₹22,000 crore. The ₹22,006 crore figure represents the total claims admitted against him as a personal guarantor for debts borrowed by several Essel/Zee-linked companies,” government sources pointed out.

“Only around ₹2,574 crore of claims relate to loans where Chandra’s personal guarantee was given at the time of the original borrowing. Most other guarantees were provided later as additional security. Therefore, the ₹22,006 crore admitted-claims figure should not be presented as ₹22,006 crore originally lent on the strength of Chandra’s personal guarantee,” the sources explained.