Subhash Chandra’s insolvency: A huge haircut, then an unusual NCLT intervention

Two wrongs don’t make a right. That old maxim can be applied to the two events surrounding Zee founder Subhash Chandra’s personal insolvency case. The first is hard to defend: a resolution that allowed ₹22,006 crore in admitted bank claims to be settled for ₹6.25 crore, effectively a 99.97% haircut. The second is in some ways more worrying, even if only because of its timing. Within days of a very public outrage over the haircut, an unprecedented five-member NCLT bench froze the settlement and Chandra’s assets.

Sure, the first order may well have needed correction. But if public outrage influenced the timing or intensity of the intervention, it appears less a remedy and more another wrong.

To be fair, the tribunal’s order does not read like a response to public anger but more like a long-drawn effort that took 11 months to complete. When a two-member bench split in September 2025, a third member was brought in. That member then wrote an independent 144-page opinion in August 2026 that departed from both original views rather than adopting either. The five-member bench’s stay order says plainly “there is no clear majority view capable of being given effect to” under Section 419(5) of the Companies Act.

The immediate problem, then, was procedural, not a fresh judicial verdict on whether a 99.97% haircut was acceptable. The original bench had failed to produce a majority view, and the tribunal had to deal with that.

But then comes the timing.

The Solicitor General of India, Tushar Mehta, appearing within a day for creditors LIC Housing Finance, Canara Bank and Union Bank, warned that the substratum of the case could vanish, meaning it could become unsustainable. And even though Chandra’s counsel told the NCLT that his client had been vilified across the country over the settlement number, the Zee founder was barred from selling assets.

None of this proves that public outrage caused the intervention. The tribunal may have been acting entirely on the procedural issue before it. But the timing becomes impossible to ignore. A ruling can be procedurally correct and still raise a question about why it became urgent only after the case became a national controversy.

After all, it isn’t the first time such a drastic haircut has been seen. Data from the Insolvency and Bankruptcy Board of India (IBBI) as of June 2026 shows 5,186 applications filed against personal guarantors since December 2019. Only 64 cases of these ended with an approved repayment plan and across all of them, creditors collectively recovered just about 1% of admitted claims. Abysmally low recoveries are therefore not unique to Chandra’s case, however different the scale might be.

So far as the records show, none of those other cases led to a specially constituted five-member bench, an intervention by the Solicitor General or an asset freeze in the same manner. Which raises the question whether the insolvency system scrutinises every extreme outcome with same degree of intensity if the case is obscure as it does when it becomes a national debate.

That is not to say that oversized haircuts have never drawn pushback. They have, but through the ordinary appellate route rather than a specially constituted bench. In the Videocon resolution of 2021, Twin Star’s plan offered ₹2,962 crore against ₹64,839 crore in admitted claims, a haircut of 95.85%; the NCLAT subsequently set it aside and sent the matter back to the committee of creditors.

The point is not that extreme haircuts are beyond scrutiny. It is through what mechanism, and at what point in the process, that scrutiny takes place.

That is what makes the Chandra case unusual. The intervention did not come simply because a creditor took the ordinary appellate route against a spectacularly low recovery. It came through a five-member bench dealing with a fractured tribunal decision, at the same moment when the underlying settlement had become a huge controversy.

Of course, none of this defends the settlement itself, nor does it endorse Chandra’s complaint of being singled out.

ALSO READ | India's insonvency framework must adabt to AI

But these are two separate issues, and India’s insolvency machinery has to be geared to address both. The first is whether a settlement that leaves creditors recovering virtually nothing deserves scrutiny. The second is whether the intensity and speed of that scrutiny changes when a case becomes a public spectacle.