HDFC Bank is exploring an appeal before the National Company Law Appellate Tribunal (NCLAT) against the National Company Law Tribunal’s (NCLT) approval of a repayment plan proposed by Zee Group founder Subhash Chandra. Under the plan, ₹6.25 crore is earmarked for creditors against admitted claims of approximately ₹22,006.57 crore, implying a recovery of only about 0.03% and a haircut of nearly 99.97%.
The development puts the focus back on a contentious personal insolvency case involving Chandra, who stood as a personal guarantor for loans taken by companies associated with the Essel Group. HDFC Bank said it opposed the settlement and voted against it, but the resolution received the required majority support. The lender’s admitted claim represented 3.2% of the total stated amount, and it inherited the relevant facility from HDFC Ltd following their 2023 merger.
HDFC Bank Weighs NCLAT Appeal Against NCLT Order
HDFC Bank has not said that an appeal has already been filed. It has said that it is exploring an appeal against the NCLT’s decision, making the NCLAT the next potential legal forum for challenging the repayment plan.
The bank’s objection is significant because the approved plan provides an exceptionally small recovery relative to the admitted claims.
Subhash Chandra Repayment Plan At A Glance
| Particular | Details |
|---|---|
| Total admitted claims | ₹22,006.57 crore |
| Amount earmarked for creditors | ₹6.25 crore |
| Insolvency process costs | ₹0.25 crore |
| Total plan value | ₹6.50 crore |
| Approx. creditor recovery | ~0.028% |
| Approx. creditor haircut | ~99.97% |
| Plan approval | 80.81% of voting share |
| HDFC Bank voting share | ~3.17% |
| HDFC Bank’s admitted claim | 3.2% of stated amount |
| HDFC Bank position | Opposed the plan |
| Potential next forum | NCLAT |
The ₹6.25 crore is the amount proposed for distribution among eligible creditors, while another ₹25 lakh is earmarked for the insolvency resolution process, taking the overall plan value to ₹6.5 crore.
Why The Recovery Figure Is So Low
The headline numbers create an unusually large gap between the claims admitted in the insolvency process and the amount available for distribution.
The arithmetic is straightforward:
₹22,006.57 crore admitted claims
↓
₹6.25 crore for creditors
↓
~0.028% recovery
↓
~99.97% haircut
The NCLT did not independently determine that creditors should accept a 99.97% haircut. Rather, the repayment plan was put to creditors, and creditors representing 80.81% of the voting share approved it. The tribunal subsequently examined whether the plan met the requirements of the Insolvency and Bankruptcy Code (IBC).
This distinction is important because the NCLT’s role was not to substitute its own commercial judgment for that of the creditors.
HDFC Bank Accounted For 3.2% Of The Claims
HDFC Bank said its admitted claim represented only 3.2% of the total stated amount.
The bank also clarified that the relevant loan facility was originally provided by HDFC Ltd and subsequently inherited by HDFC Bank following the merger of the two institutions, which became effective on July 1, 2023.
The lender had voted against the resolution.
Several other major financial institutions also opposed the plan.
Major Creditors And Their Voting Positions
| Creditor | Voting Share | Position |
|---|---|---|
| LIC Housing Finance | 6.09% | Opposed |
| HDFC Bank | 3.17% | Opposed |
| Axis Bank | 2.86% | Opposed |
| Canara Bank | 1.60% | Opposed |
| IDBI Trusteeship Services | 3.36% | Opposed |
| RBL Bank | 0.55% | Opposed |
| Union Bank of India (UK) | 0.76% | Opposed |
| IndusInd Bank | 1.11% | Did not vote |
| Indiabulls Housing Finance | 1.98% | Supported |
The combined opposition did not have enough voting power to block the plan after the required majority backed it.
LIC Housing Finance Also Challenged The Recovery
LIC Housing Finance (LICHFL) was among the strongest objectors to the plan.
Its admitted claim stood at ₹1,322.39 crore, but the proposed repayment was only ₹38.09 lakh.
That works out to approximately 0.028% of its admitted dues.
| Creditor | Admitted Claim | Proposed Recovery | Approx. Recovery Rate |
|---|---|---|---|
| All admitted creditors | ₹22,006.57 crore | ₹6.25 crore | ~0.028% |
| LIC Housing Finance | ₹1,322.39 crore | ₹38.09 lakh | ~0.028% |
LICHFL argued that such a small recovery was unviable and unlawful and also questioned whether the proposed payment was sufficiently certain under the plan.
The NCLT nevertheless approved the plan after considering the voting outcome, the resolution professional’s valuation and the statutory framework governing personal-guarantor insolvency.
NCLT Approved The Plan After A Split Verdict
The repayment plan reached a third NCLT member because the original two-member bench delivered differing opinions.
Nilesh Sharma was appointed as the third member to decide the points of disagreement. On August 25, he favoured approval of the plan under Section 114 of the IBC.
The matter will now return to the original bench for the formal order giving effect to the majority opinion.
NCLT Case Timeline
| Date / Stage | Development |
|---|---|
| 2022 | Indiabulls Housing Finance approached NCLT |
| 2024 | Insolvency plea against Chandra admitted |
| Earlier proceedings | Two-member NCLT bench delivered split verdict |
| February 2026 | Third member appointed |
| August 25, 2026 | Nilesh Sharma backed repayment plan |
| August 27, 2026 | HDFC Bank said it is exploring NCLAT appeal |
| Next stage | Formal NCLT order and potential NCLAT challenge |
The case originated from a ₹170 crore loan to Vivek Infracon for which Chandra had provided a personal guarantee. Indiabulls Housing Finance, now known as Sammaan Capital, moved the tribunal after the loan turned bad.
This Is A Personal Guarantor Insolvency Case
An important distinction is that the proceedings concern Chandra in his capacity as a personal guarantor, rather than insolvency proceedings against the entire Essel Group.
Chandra has maintained that he did not personally borrow the ₹22,000 crore cited in the insolvency proceedings. Instead, he provided personal guarantees for borrowing undertaken by companies associated with him.
Business Standard noted that admitted claims against Chandra therefore represent creditors’ claims against him as guarantor, rather than evidence that he personally received ₹22,006 crore in loans.
Borrower And Guarantor Structure
Essel Group-Associated Companies
↓
Loans Raised From Lenders
↓
Subhash Chandra Provides Personal Guarantees
↓
Principal Borrower Defaults
↓
Creditors Pursue Guarantee
↓
Personal Insolvency Proceedings
This structure is central to understanding why the size of the admitted claims and Chandra’s personal assets are being discussed together.
Chandra Disputes The ₹22,000 Crore Interpretation
Chandra has disputed the way the size of his liability has been characterized.
In a statement, he said the claims against him as a personal guarantor were ₹3,992 crore, rather than ₹22,000 crore. He said ₹620 crore had already been settled and borrowing entities had offered to pay another ₹1,063 crore.
He also emphasized that the proceedings relate to guarantees and not personal borrowing.
The distinction creates two different ways of looking at the case: the aggregate claims admitted in the insolvency process and the subset of claims Chandra says were actually being pursued by dissenting creditors.
Competing Figures In The Case
| Figure | What It Represents |
|---|---|
| ₹22,006.57 crore | Total admitted creditor claims cited in the NCLT proceedings |
| ₹21,696 crore | Admitted claims cited in Chandra’s statement |
| ₹3,992 crore | Claims Chandra says were held by objecting lenders |
| ₹620 crore | Claims Chandra says had already been settled |
| ₹1,063 crore | Further amount he says borrowing entities offered |
| ₹6.25 crore | Distribution corpus for eligible creditors |
| ₹6.50 crore | Total repayment plan including process costs |
These figures should not be treated as interchangeable because they refer to different categories of claims and stages of the insolvency process.
Why NCLT Approved Such A Steep Haircut
The tribunal considered whether creditors could realistically recover more if the repayment plan were rejected.
According to the NCLT’s reasoning, the resolution professional’s valuation indicated that Chandra’s realizable personal estate was worth significantly less than the amount proposed under the plan. The tribunal therefore considered the possibility that bankruptcy could result in a lower recovery.
The NCLT also emphasized that it could not substitute its own commercial wisdom for that of the creditors.
Since creditors representing 80.81% of voting share supported the plan, the tribunal found that the statutory conditions for approval had been met.
Creditor Voting Became A Key Issue
Dissenting lenders had also questioned whether certain entities that voted in favour of the plan were associated with Chandra and therefore whether their votes should have been counted.
The entities named in the objections included Veena Investments, Direct Media Distribution Ventures, World Crest Advisors, Lemonade Capital Advisors and Corpcall Capital Advisors.
The third member of the NCLT did not find sufficient evidence to establish that these entities met the statutory definition of associates for purposes of excluding their votes. As a result, their votes remained part of the majority supporting the plan.
This issue could become relevant if the plan is challenged before the NCLAT.
What An NCLAT Challenge Could Focus On
If HDFC Bank proceeds with an appeal, the case could bring several questions before the appellate tribunal.
Potential areas of challenge include the approval process, creditor voting, treatment of disputed claims, the assessment of Chandra’s assets and whether the repayment plan complied with the IBC.
The precise grounds of any appeal cannot be established until HDFC Bank files one.
Potential Issues In A Challenge
| Issue | Why It Matters |
|---|---|
| Creditor voting | Determines whether the required majority was valid |
| Related-party allegations | Could affect eligibility of certain votes |
| Claim verification | Determines the creditor pool |
| Asset valuation | Central to expected recovery |
| Repayment-plan compliance | Tests statutory validity |
| Commercial viability | Relevant to creditor objections |
| Binding effect | Determines consequences for dissenting lenders |
HDFC Bank has so far only said it is exploring an appeal; no filed appeal has been established in the sources available as of August 27.
What The Case Means For Banks And Creditors
The dispute highlights the difficult trade-off in personal-guarantor insolvency proceedings.
A creditor may have a very large contractual claim, but the recoverable amount can ultimately depend on the guarantor’s realizable assets, the repayment plan and the broader insolvency process.
For lenders, the case also underscores the importance of evaluating personal guarantees and recovery prospects alongside the financial strength of the principal borrower.
For the insolvency framework, the matter tests how far a repayment plan can reduce creditor recoveries when the voting majority supports it and the tribunal finds that rejecting the plan may not produce a better outcome.
The Bigger Picture
HDFC Bank’s potential NCLAT challenge puts a major spotlight on India’s personal-guarantor insolvency framework. The immediate dispute is over a ₹6.25 crore creditor payout against ₹22,006.57 crore of admitted claims, but the larger issue is how lenders should be protected when the realizable value of a guarantor’s personal estate is far below the amount guaranteed.
The NCLT’s approval shows that a very steep haircut can pass through the insolvency process when the statutory voting threshold is met and the tribunal concludes that the plan complies with the IBC. A potential NCLAT appeal could now test the legal and procedural issues raised by dissenting creditors and determine whether the plan survives further scrutiny.
Looking Ahead
The next immediate development will be whether HDFC Bank formally files an appeal before the NCLAT. If it does, the appellate tribunal could examine the objections surrounding voting, claim verification, asset valuation and the approval of the repayment plan. Other dissenting lenders may also watch the proceedings closely because the outcome could affect their recovery rights.
For the wider banking and insolvency ecosystem, the case could become an important reference point for personal guarantees and creditor recoveries. The final outcome will help clarify how tribunals balance creditor voting, realizable assets and statutory requirements when a proposed settlement is dramatically smaller than the claims admitted in the insolvency process.
Get the day’s top stories in your inbox
One concise email. No spam, unsubscribe anytime.
