A repayment plan for Zee Group founder Subhash Chandra has sparked fury among bankers. The National Company Law Tribunal (NCLT) recently approved a settlement. It allows him to clear personal guarantees on debts of ₹22,006 crore by paying just ₹6.5 crore. This decision represents a staggering 99.97% haircut for creditors and highlights concerns over Subhash Chandra’s debt settlement.
The NCLT Delhi Bench approved this controversial plan on Tuesday, August 25, 2026. This followed a split verdict, with judicial member Nilesh Sharma resolving the matter. A consortium of dissenting financial creditors, including HDFC Bank, Axis Bank, and Canara Bank, are questioning the process. They fear it could set a damaging precedent for holding high-profile promoters accountable.
Questions about Subhash Chandra’s debt settlement spark demands for audit
At the heart of the lenders’ objections is the dramatic collapse of Chandra’s declared personal wealth. When he issued personal guarantees for Essel Group-linked company loans, his net worth was certified at substantial figures. A 2018 certificate provided to Canara Bank pegged it at ₹40,562 crore.
Another certificate from 2017, furnished to RBL Bank, cited a net worth of $7.17 billion, approximately ₹45,888 crore. This significant discrepancy between past and present figures has drawn sharp criticism from banks.
During the insolvency proceedings, Chandra’s disclosed net worth plummeted to around ₹31.79 crore. This drastic decline prompted dissenting banks to repeatedly demand a forensic audit and asset-tracing investigation. They wanted to understand where the considerable wealth had gone.
Both the RP and the NCLT ultimately rejected these pleas. They ruled such an investigation wasn’t a mandatory requirement for approving a repayment plan under the Insolvency and Bankruptcy Code (IBC). This ruling raises questions about established legal precedents in similar financial disputes.
One senior banker involved in the case stated that lenders faced an “uphill battle” from the moment the petition was admitted in April 2024. “Banks will have to challenge this till even the Supreme Court,” the banker said, “because otherwise this will become a model and trend setter for future cases.” This highlights deep concerns within the financial community.
Committee of creditors’ controversial composition
A critical point for dissenting banks is the composition of the Committee of Creditors (CoC). This body was responsible for voting on the repayment plan. Lenders allege the committee was effectively stacked with entities linked to Subhash Chandra, “crowding out” financial creditors and ensuring the low settlement offer’s approval.
The plan was ultimately backed by creditors holding an 80.8% voting share. The majority was controlled by a group of companies whose connections to Chandra have been heavily scrutinized by bankers. These include Veena Investments, which alone held a 5% vote share.
Other significant votes came from World Crest Advisors (28.49%), Direct Media Distribution Ventures (1.15%), Lemonade Capital Advisors (16.85%), and Corpcal Capital Advisors (10.30%). Directors at these firms were reportedly key management personnel in the Essel Group at various times. Collectively, these entities, which banks argue are related parties, held approximately 61.78% voting share in the CoC.
This was significantly more than the 66% required to pass the resolution. Despite objections from banks like Canara Bank, HDFC Bank, and IndusInd Bank, the NCLT allowed these entities to participate and vote. The tribunal’s decision hinged on a narrow legal interpretation of “control” within the IBC. This creates a flashpoint with wide-ranging consequences for future insolvency cases.
Resolution professional’s actions draw scrutiny
The conduct of RP Shiv Nandan Sharma has come under intense scrutiny. Dissenting creditors accused him of failing to conduct meaningful negotiations and rushing the process. They also cited a short six-day window to consider the plan, with the final voting day falling on a public holiday.
These objections, including claims that the extended voting period closed on October 31, 2024, a Diwali public holiday, were ultimately dismissed by the tribunal. Sharma rejected this, stating creditors had unanimously agreed to shorten the notice period and over 95% participated.
Most significantly, the court found no fault with the RP for not appointing a forensic auditor to investigate Chandra’s finances. The NCLT order noted that the IBC does not grant the RP “a general investigative power” comparable to a Bankruptcy Trustee’s authority. This interpretation suggests the RP couldn’t be faulted for not investigating past transactions or the guarantor’s net worth drop.
Judicial member Nilesh Sharma acknowledged that the entities who voted were “controlled directly or indirectly by the individuals related to the PG.” He stated the law defines control by share capital ownership, not commercial influence. Justice Sharma concluded that legislative action is needed if a wider exclusion becomes necessary, not tribunal amendment.
This puts the onus squarely on lawmakers to reconsider the legal interpretation of related parties.
Implications for future debt recovery
The outcome of the Subhash Chandra case is being watched closely by the entire financial sector. For the dissenting banks, the fight is far from over. They are expected to appeal the NCLT’s decision, arguing the process was fundamentally flawed and compromised.
But the broader implications truly worry lenders. If a promoter can secure personal guarantees worth thousands of crores, then settle for less than a tenth of a percent, it severely weakens their power. This process, influenced by allegedly related entities, undermines a key tool for banks.
This outcome could embolden other indebted promoters. It effectively provides a blueprint for negotiating significant haircuts through similar mechanisms.
This case highlights immense difficulties banks face in recovering dues in high-profile cases. Such cases often involve complex corporate structures. As one banker noted, the fear is this settlement won’t be an anomaly.
Instead, it might provide a blueprint for other indebted promoters. The upcoming appeals will be a crucial test of the IBC’s ability to balance resolution goals with fairness and legal accountability.