India’s largest private sector lender, HDFC Bank, and LIC Housing Finance (LICHFL) are preparing to legally challenge a controversial debt resolution plan for Subhash Chandra, chairman emeritus of Zee Entertainment Enterprises Ltd. The National Company Law Tribunal (NCLT) in Delhi approved a settlement on 2026-08-25 that only requires Chandra to pay ₹6.25 crore against personal guarantees exceeding ₹22,000 crore.

This plan, which suggests a minimal recovery for creditors on the guarantee, was approved despite strong opposition from several major financial institutions. HDFC Bank and LICHFL have since announced their intention to appeal the decision at the National Company Law Appellate Tribunal (NCLAT), signaling a looming legal battle over promoter accountability.

Lenders decry Zee resolution’s substantial debt haircut

The crux of this dispute lies in the significant financial hit lenders are expected to take. Against total admitted claims of ₹22,006 crore, which are linked to Chandra’s personal guarantee for loans to Zee Group companies, the approved plan provides for a personal payment of only ₹6.25 crore. This has drawn widespread criticism, effectively representing an approximate 99.97% “haircut” for the creditors.

HDFC Bank, holding an admitted claim of ₹698 crore, voted against the resolution and confirmed it’s exploring an appeal. “HDFC Bank had opposed and voted against this resolution, which was approved by the majority. The bank is exploring filing an appeal at the National Company Law Appellate Tribunal,” the lender said in a statement.

This move by India’s largest private bank underscores its deep dissatisfaction with the NCLT’s outcome.

State-owned LIC Housing Finance is taking a similar firm stance. With an admitted claim of ₹1,322.39 crore, it stands to receive a mere ₹38.09 lakh under the present plan. LICHFL has decided to challenge the ruling at the NCLAT and also plans to seek intervention from the National Housing Bank (NHB), which serves as the housing sector’s apex financial institution.

They aren’t the only ones in opposition. Other lenders like Axis Bank, Canara Bank, RBL Bank, Union Bank UK, and IDBI Trusteeship (for Franklin Templeton) also opposed the plan. These institutions represent a significant portion of the financial creditors who felt the proposed recovery was completely inadequate, yet their collective dissent couldn’t prevent the resolution’s approval.

Scrutiny over committee of creditors’ vote

The resolution plan narrowly cleared the necessary threshold, passing with 80.8% of the committee of creditors (CoC) voting in favor. This close margin has led to intense scrutiny, not just of the outcome, but also of the identities of those who supported it. Dissenting creditors have voiced serious concerns regarding the alleged association of several assenting entities with Subhash Chandra himself.

Entities including Appearance Corpcall Capital Advisors LLP, Catalyst Trusteeship, World Crest Advisors LLP, Direct Media Distribution Ventures Private Limited, Lemonade Capital Advisors LLP, and Veena Investments Private Limited all approved the plan.

The purported connections between these firms and the promoter have fueled arguments that the vote did not accurately reflect the will of independent, third-party creditors. This raises fundamental questions about the integrity of the CoC process in personal guarantor insolvency cases, especially when considering what your company should do first after such a ruling.

The Insolvency and Bankruptcy Code (IBC) has provisions designed to prevent related parties from influencing such votes. The NCLAT appeal will almost certainly center on this issue. Dissenting banks will likely contend that the plan is neither fair nor equitable, and its approval was secured through a voting bloc that should have been disqualified.

The entire situation highlights the complexities involved for lenders trying to recover unpaid invoices from another company, even with personal guarantees in place.

Tie-breaking judicial vote pushed plan through

The contentious nature of the NCLT’s decision was further emphasized by a split among its members. The Delhi bench required the intervention of a third judicial member, Nilesh Sharma, to break the deadlock. His vote in favor ultimately approved the plan on 2026-08-25, under Section 114 of the Insolvency and Bankruptcy Code, overriding the objections of the dissenting lenders.

Clarifying the ₹22,006 crore liability figure

While headlines often highlight the substantial ₹22,006 crore figure, officials have clarified that this amount represents the total claims admitted against Subhash Chandra as a personal guarantor. It does not mean Chandra personally borrowed the entire sum. The debt was taken on by various companies linked to the Essel and Zee Group, and these principal borrowers remain separately liable for repayment.

The approved resolution plan reportedly includes a provision for these principal borrowers to pay around ₹1,494 crore. This amount is distinct from and in addition to Chandra’s personal contribution of ₹6.25 crore. When considering both components, the total recovery for creditors is higher than the minimal amount from the guarantee alone, though still a fraction of the total outstanding debt.

Officials also noted that only about ₹2,574 crore of the total claims relate to loans where Chandra’s personal guarantee was issued at the time of the original borrowing. Most of the other guarantees, they said, were provided later as “additional security” when the financial health of the borrowing companies began to decline.

Chandra, for his part, disputes the ₹22,006 crore figure, claiming his total liability as a personal guarantor was ₹3,992 crore. The Resolution Professional assessed his net worth at ₹31.8 crore, with ₹25 crore attributed to his mortgaged house.

What’s next for the Zee debt saga

The legal battle now shifts to the National Company Law Appellate Tribunal. HDFC Bank and LICHFL are poised to lead the challenge, arguing that the NCLT made an error in approving a plan so heavily weighted against the financial creditors.

The appeal will likely serve as a crucial test for the legal framework governing personal guarantors, particularly regarding how their assets are valued and how their resolution plans are ultimately assessed.

This case is being closely watched across the Indian financial sector. The Insolvency and Bankruptcy Code was implemented to address bad loans and strengthen creditor rights. However, outcomes such as this one raise questions for some about the effectiveness of the system.

If promoters can settle massive guarantee obligations for such a small fraction of the amount, it could diminish the perceived value of personal guarantees, which are vital tools for banks lending to large corporations. The NCLAT’s upcoming decision will have significant implications, potentially reinforcing promoter accountability or establishing a precedent for discharge with minimal payment.