Introduction: Welcome to the World’s Most Expensive Haircut
There are haircuts, there are extreme haircuts, and then there is the kind of haircut that makes a barber quietly put down his scissors and ask, “Sir, are you sure this is legal?”
In a development that has given the word “settlement” an entirely new sense of humour, the National Company Law Tribunal (NCLT) has approved a repayment plan under which businessman Subhash Chandra will pay around ₹6.5 crore against admitted creditor claims of approximately ₹22,006.57 crore.
That leaves lenders facing a staggering 99.97% haircut, with recovery of only about three paise for every ₹100 claimed.
For ordinary Indians, a haircut usually means walking into a salon with ₹300 and walking out looking slightly different.
In the world of insolvency, apparently, the same concept can involve thousands of crores disappearing from the bill.
Somewhere, a middle-class borrower who once begged a bank manager for an extra week to pay an EMI is staring at the news and wondering whether he has been approaching the banking system incorrectly all these years.
The Mathematics That Made the Calculator Nervous
Let us begin with the numbers.
Amount claimed by creditors: ₹22,006.57 crore
Amount offered under the repayment plan: ₹6.5 crore
Approximate recovery: 0.03%
Approximate haircut: 99.97%
In other words, for every ₹100 that creditors were owed, they would recover roughly three paise. citeturn0search11
That is not a discount.
That is a clearance sale where the shopkeeper has accidentally sold the entire mall for the price of one premium apartment.
Imagine being a creditor and receiving a message:
“Good news! Your ₹1,000 crore has been processed.”
You open the attachment.
₹30.
You stare at the screen.
You refresh it.
Still ₹30.
You call customer service.
“Sir, please don’t worry. Your recovery has been successfully completed.”
At this point, even Excel might throw an error.
When “Haircut” Became a Financial Hairstyle
The word haircut normally suggests trimming something down.
A little here.
A little there.
Maybe a stylish fade.
But a 99.97% haircut is operating in an entirely different category.
This is not a trim.
This is a financial tonsure.
You don’t walk out of this salon looking slightly different.
You walk out wondering where the rest of your money went.
The political humour practically writes itself. Congress leader Jairam Ramesh described the episode as being closer to a “mundan” than a haircut, criticizing the scale of the creditor loss.
And suddenly, Indian finance has discovered a new vocabulary.
Haircut: 20% reduction.
Heavy haircut: 50% reduction.
Extreme haircut: 80% reduction.
Subhash Chandra haircut: Please remove everything except ₹6.5 crore.
The NCLT Wasn’t Holding the Scissors
Before the internet turns the tribunal into a neighbourhood barber shop, there is an important detail.
The NCLT did not simply wake up one morning and decide that ₹22,006 crore looked excessive.
The case involved personal insolvency proceedings, and the repayment plan had already received the required creditor support, reportedly representing about 80.81% of the voting share. The original two-member bench had delivered a split verdict, after which NCLT Member (Judicial) Nilesh Sharma acted as the third member to resolve the disagreement.
The tribunal ultimately approved the plan under the Insolvency and Bankruptcy Code.
So, in our cartoon version, the NCLT judge should probably not be portrayed as the villain wielding scissors.
He is better imagined as the referee standing beside the haircut machine saying:
“I didn’t invent the hairstyle. I’m just following the rulebook.”
That distinction matters.
Because the real comedy here is not that a tribunal decided to give somebody a discount.
The real comedy is the extraordinary distance between ₹22,006 crore and ₹6.5 crore.
The Creditors Who Asked: “Is This a Joke?”
Not everyone was amused.
Several creditors objected to the proposed recovery, arguing that the payout was far too small.
LIC Housing Finance, for example, had an admitted claim of around ₹1,322.39 crore, while the proposed repayment was only around ₹38.09 lakh.
For an ordinary person, owing ₹1,322 and offering ₹38 might sound like a bad joke.
For a financial institution, multiply both numbers by a crore.
Suddenly the joke has become a board meeting.
The objections reportedly focused on the extremely low recovery and questions surrounding Chandra’s financial position and assets.
The tribunal nevertheless approved the plan, with the legal framework giving considerable weight to the commercial decision of creditors once the requisite voting threshold has been met.
Which means the creditors effectively participated in a democratic process.
They voted.
The required majority supported the plan.
And now everyone gets to live with the result.
Democracy, but with spreadsheets.
The ₹22,000-Crore Question
The most fascinating part of the entire episode is not even the ₹6.5 crore.
It is the ₹22,006 crore sitting on the other side of the equation.
Because once you see that number, the human brain starts asking increasingly ridiculous questions.
Could the missing ₹22,000 crore be hiding behind the sofa?
Was it accidentally left in another Excel sheet?
Did someone type one too many zeroes?
Should creditors try checking the pockets of the old financial statements?
Of course, the real explanation is far less comedic.
The proceedings concern personal guarantees connected to borrowings by Essel Group-linked companies. A personal guarantee can give lenders a legal route against a guarantor, but it does not magically turn into cash. Recovery ultimately depends on legally available assets and the insolvency process.
And that is where the joke becomes a serious lesson.
The New Golden Rule of Borrowing
India’s salaried class has traditionally been taught a few basic principles.
Pay your EMI on time.
Don’t miss credit-card payments.
Keep your credit score healthy.
Don’t borrow more than you can repay.
If you owe the bank money, answer its calls.
But perhaps there is another rule emerging from this episode:
The scale of the debt matters.
If you owe ₹10,000, the bank calls you.
If you owe ₹10 lakh, the bank calls you and sends an email.
If you owe ₹10 crore, lawyers may become involved.
If the number reaches ₹22,000 crore, the vocabulary changes.
Suddenly everyone is discussing:
“Resolution.”
“Commercial wisdom.”
“Repayment plans.”
“Haircuts.”
At that point, nobody seems interested in asking whether you remembered your EMI date.
A New Banking Product: The Premium Haircut Loan
Naturally, the financial industry should consider adapting.
Introducing the revolutionary Premium Haircut Loan.
Borrow ₹10,000 crore.
Repay ₹3 crore.
Receive a complimentary repayment plan.
No-cost EMI available subject to insolvency proceedings.
Terms and conditions apply.
For ordinary customers, the bank could even introduce a loyalty programme.
Borrow ₹1 lakh: 1% haircut.
Borrow ₹10 lakh: 5% haircut.
Borrow ₹1 crore: Speak to our relationship manager.
Borrow ₹1,000 crore: Please contact the NCLT.
Borrow ₹22,000 crore: Congratulations, you’ve unlocked Platinum Haircut status.
The Real Lesson Behind the Laughs
Behind all the satire lies a serious issue.
The case demonstrates the enormous difference between the amount a lender is owed and the amount it can realistically recover.
A personal guarantee may strengthen a lender’s legal position, but its value ultimately depends on the guarantor’s assets and what the insolvency process can actually realise.
For banks and financial institutions, that makes this case a reminder that the quality of a promoter guarantee matters just as much as its existence. citeturn0news1
For everyone watching from outside the banking system, however, there is one number that will remain difficult to forget:
₹22,006 crore → ₹6.5 crore.
That is not merely a haircut.
That is a hairstyle with its own financial planning department.
Conclusion: Please Keep Your EMI Receipt
The NCLT’s decision may be perfectly understandable within the legal framework of insolvency proceedings, but the numbers remain spectacular enough to make even seasoned financial observers blink twice.
Creditors backed the plan by the required majority, the tribunal approved it, and the repayment process moves forward.
But the phrase “99.97% haircut” is destined to live far beyond the courtroom.
Because in India, we have now entered an era where a haircut can mean anything from losing a few millimetres of hair to losing almost an entire ₹22,006-crore claim.
And somewhere tonight, an ordinary borrower will open his banking app and discover that his ₹14,872 EMI is due tomorrow.
He will stare at it.
He will sigh.
He will transfer the money.
Because apparently, there are two kinds of debt in India:
The kind where you pay the EMI—and the kind where you get a haircut.
