One Group, One Grave? The Cases For Substantive Consolidation In Governance-Weak Conglomerates

This article explores the phenomenon of group insolvency in India, a growing concern that affects not just the Corporates but the health of the broader economy. With a sharp rise in Corporate Insolvency Resolution Processes (CIRPs) over the past five years, it becomes critical to examine why even high-profile business groups, which were once considered financially robust, are now collapsing under the weight of their internal governance fiascos. Through a focused analysis of five case studies, Videocon Group, Lavasa Corporation Ltd, Essel Homes Pvt Ltd, Jaypee Group, and IREO Five Rivers, the article maps the systemic deficiencies that triggered these group-level failures. There are several judgments passed early, as held in Edelweiss Asset Reconstruction Co Ltd v. Sachet Infrastructure Pvt Ltd & Ors, (Edelweiss Asset Reconstruction Company Ltd. v. Sachet Infrastructure Pvt. Ltd., 2019), where the NCLAT ordered a simultaneous Corporate Insolvency Resolution Process (CIRP) for five group companies under a common resolution professional. The Supreme Court, in Bikram Chatterji & Ors. v. Union of India, exercised its powers to protect homebuyers affected by the Amrapali Group's financial crisis Dasgupta, Karbhari, & Shikha, 2021). The collapse of the IL&FS Group, a massive corporate entity with 348 companies, further emphasised the urgent need for a structured group insolvency framework under the IBC. A major development came on June 22, 2021, when the NCLAT, while dealing with the IL&FS case, acknowledged that the legal framework had evolved to accommodate group insolvency (Dasgupta, Karbhari, & Shikha, 2021) This study looks deeper into the governance fabric of these corporate groups rather than simply highlighting financial shortcomings. The recurring themes of promoter overreach, opaque intra-group dealings, weakened oversight, and structural opacity reveal that traditional financial analysis is no longer sufficient to predict or prevent corporate distress. These failures are not abnormalities; they are characteristic of a much larger oversight that continues to threaten investor capital and economic productivity.