Updated at 1.15pm on 29 August 2026 to include a statement from Union Bank of India
HDFC Bank is considering an appeal before the national company law appellate tribunal (NCLAT) against a national company law tribunal (NCLT) order approving a ₹6.5 crore repayment plan for Subhash Chandra, the founder and chairman emeritus of Zee group, after creditors filed admitted claims totalling ₹22,006.57 crore in his personal insolvency proceedings. Meanwhile, Union Bank of India (UK), one of the lenders that rejected the resolution plan, stated that it will immediately file an appeal against the NCLT order before the NCLAT.
LIC Housing Finance is also among the lenders that opposed the repayment plan, says a report from
the Economic Times. However, the housing finance company has clarified that the NCLT order does not affect the corporate liabilities of the underlying borrowers or its security over the assets.
The development has drawn attention because the approved plan provides only ₹6.25 crore for distribution among creditors, with another ₹25 lakh earmarked towards the insolvency resolution process costs. This translates into a recovery of only around 0.028% of the admitted claims—or roughly ₹28 for every ₹1 lakh claimed—implying a haircut of nearly 99.97%.
According to a
report by Mint, HDFC Bank told the publication that it expects to recover only 3.2% of its total admitted claims under the order. The Bank had opposed the plan and voted against it and is now considering an appeal before the NCLAT.
A spokesperson of HDFC Bank told CNBC-TV18 that the Bank's admitted claim represented 3.2% of the total stated amount and that the facility had been inherited from HDFC Ltd following the merger of the two entities.
The spokesperson said the Bank had opposed the settlement and voted against the resolution, which was nevertheless approved by the majority of creditors. The bank is now exploring an appeal before the NCLAT.
Plan Approved after Split NCLT Verdict
The NCLT's approval came after an initial two-member bench delivered differing opinions on the repayment proposal. A third judicial member, Nilesh Sharma, was subsequently appointed to resolve the points of difference.
The plan secured the support of creditors representing 80.81% of the voting share. HDFC Bank's 3.2% share of admitted claims was not sufficient to block the proposal.
The case concerns Mr Chandra's personal insolvency arising from personal guarantees he provided for borrowings by several Essel- and Zee-linked companies.
Government sources cited by Mint stressed that the case should not be interpreted as Mr Chandra having personally borrowed ₹22,000 crore. Rather, the insolvency proceedings relate to guarantees he provided for loans raised by group companies.
The sources said only around ₹2,574 crore of the claims related to loans for which Mr Chandra had provided personal guarantees when the loans were originally taken. Most of his other guarantees were reportedly provided later as additional security.
Chandra Says He Was Only a Guarantor
Mr Chandra has disputed the ₹22,006 crore liability and has argued that the amount represents historical claims filed in 2022.
He has maintained that he was a personal guarantor rather than the principal borrower. According to the reports, Mr Chandra put the claims of dissenting creditors at ₹3,992 crore, of which ₹620 crore had been settled, while the borrowing entities had offered another ₹1,063 crore to ₹1,113 crore.
The larger pool of claims from creditors supporting the repayment plan is also being addressed through the principal borrowing companies, according to the reports.
Mr Chandra has also said that several guarantees were provided after group companies had already defaulted, following appeals from lenders. He claimed that lenders made ‘emotional appeals’, warning that employees could lose their jobs if guarantees were not provided.
The distinction between Mr Chandra's liability as a personal guarantor and the liabilities of the companies that actually borrowed the money is central to the case.
Creditors Divided over Repayment Proposal
The repayment plan was supported by creditors representing more than 80% of the voting share, but several lenders challenged it, citing the extremely low recovery available to them.
The dissenting lenders reportedly include HDFC Bank, Axis Bank, Canara Bank, RBL Bank, Union Bank UK, IDBI Trusteeship and LIC Housing Finance. Together, dissenting creditors accounted for around 15% of the voting share, according to the reports.
The objecting lenders also raised questions over the eligibility of creditors that supported the plan. They alleged that entities including Veena Investments, Direct Media Distribution Ventures, World Crest Advisors, Lemonade Capital Advisors and Corpcall Capital Advisors were related or associate entities and collectively controlled around 61.8%-62% of the voting rights.
The dissenting creditors cited Section 109(4)(b) of the Insolvency and Bankruptcy Code (IBC) in challenging the participation or voting eligibility of these entities.
Among the relationships cited was the alleged control of Veena Investments by Sushila Devi Goel, wife of Jawahar Goel, who is Mr Chandra's brother. The lenders also pointed to links involving partners of Lemonade Capital Advisors and Corpcall Capital Advisors, as well as companies disclosed as related parties in Veena's accounts.
HDFC's ₹698 Crore Claim
HDFC Bank's admitted claim in the proceedings was around ₹698 crore, accounting for 3.2% of the total claims.
The Bank has already made provisions against the facility, meaning it has recognised the potential loss in its accounts. Nevertheless, its decision to explore an NCLAT appeal indicates that it continues to challenge the settlement approved by the NCLT.
The facility was originally provided by HDFC Ltd and subsequently came under HDFC Bank following the merger between the two entities.
The case, therefore, presents a significant test of how personal guarantees given by promoters are treated in insolvency proceedings, particularly where the underlying corporate borrowers continue to have liabilities towards lenders.
LIC Housing Finance's Security Remains Intact
LIC Housing Finance has a separate exposure in the matter. Its admitted claim stands at ₹1,322.39 crore, while its allocation under the approved repayment plan is only ₹38.09 lakh.
Despite the extremely low payout from Mr Chandra's personal insolvency plan, LIC Housing Finance has clarified that its underlying mortgage charges over the secured assets remain valid.
This means the NCLT-approved repayment plan does not extinguish the lender's security interests or the liabilities of the actual corporate borrowers. The lender can continue to rely on its security and pursue recovery from the underlying borrowers in accordance with applicable law.
The distinction is important because approval of Mr Chandra's personal repayment plan does not, by itself, amount to a waiver of the companies' obligations to their lenders.
What the Dispute Means
At the heart of the dispute is whether the ₹6.5 crore settlement provides a better recovery outcome than proceeding with Mr Chandra's bankruptcy.
Creditors supporting the plan reportedly argued that liquidation or bankruptcy of the personal guarantor would not necessarily generate a better recovery. They pointed to the resolution professional's assessment of Chandra's net worth at ₹31.8 crore, including a mortgaged house valued at around ₹25 crore.
The supporting creditors, therefore, contended that the ₹6.5-crore proposal represented a superior outcome compared with pushing the personal guarantor into bankruptcy, while the principal borrowers would continue to remain liable for their respective debts.
Opposing lenders, however, have questioned the process and the exceptionally low recovery offered to creditors.
With HDFC Bank now considering an NCLAT challenge, the dispute could move to the appellate tribunal, potentially subjecting the repayment plan and issues surrounding creditor eligibility and voting to further judicial scrutiny.
UPDATE:
In a statement posted on X, Union Bank of India said Union Bank of India (UK) along with other public sector undertakings (PSUs) have rejected the resolution plan and is now immediately challenging the decision of NCLT before NCLAT.
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