The insolvency case involving Zee Group founder and chairman emeritus Subhash Chandra has attracted attention because of one striking figure: creditors have admitted claims of around ₹22,006.57 crore, but the repayment plan approved by the National Company Law Tribunal (NCLT) provides for only about ₹6.5 crore.
At first glance, the numbers appear difficult to understand. How can someone facing claims worth more than ₹22,000 crore be allowed to settle the matter for just ₹6.5 crore?
The answer lies in how personal insolvency proceedings work under India’s Insolvency and Bankruptcy Code (IBC).
In simple terms, the NCLT was not deciding how much money Subhash Chandra should ideally pay. It was examining whether the repayment plan approved by the required majority of creditors complied with the law and whether rejecting it would actually give creditors a better recovery.
Here is the entire case explained in simple terms.
What Is The Subhash Chandra Case?
The case concerns Subhash Chandra’s personal liability as a guarantor for a company loan.
A personal guarantee means that a person promises a lender that if a company fails to repay a loan, the guarantor may have to meet the obligation, subject to the terms of the guarantee and applicable law.
Chandra had provided a personal guarantee for a ₹170-crore loan taken by Vivek Infracon.
When the loan ran into trouble, the lender moved against Chandra. Indiabulls Housing Finance initiated insolvency proceedings against him. The company was later renamed Sammaan Capital.
The insolvency proceedings were admitted by the NCLT in April 2024.
Importantly, this does not mean Chandra personally borrowed ₹22,000 crore from the lenders. The large figure represents the claims admitted against him in the personal insolvency process, arising from guarantees and related liabilities.
Why Is ₹6.5 Crore Causing So Much Debate?
The biggest issue is the enormous difference between the admitted claims and the amount creditors are expected to recover.
Creditors have claims totalling approximately:
₹22,006.57 crore
The repayment plan offers approximately:
₹6.5 crore
That works out to a recovery of roughly 0.03 per cent.
Put another way, creditors would receive only about three paise for every ₹100 claimed.
This is why the decision has attracted strong criticism from some legal experts and lenders.
Abhishek Swaroop, Partner at Saraf and Partners, told NDTV: “The NCLT order sets a wrong precedent. A resolution plan with a haircut in excess of 99 per cent cannot be termed as a ‘commercial wisdom’. Any decision taken in exercise of commercial wisdom has to be at least make commercial sense.”
A “haircut” in insolvency cases simply means the amount a creditor agrees to give up compared with the amount originally claimed.
Why Did The NCLT Approve The Plan?
This is where the case becomes more complicated.
The repayment proposal did not receive unanimous support from creditors. Some lenders strongly opposed it.
For example, LIC Housing Finance had an admitted claim of around ₹1,322.39 crore, but the repayment proposed to it was only around ₹38 lakh.
The lender argued that such a recovery was extremely low.
However, creditors representing 80.81 per cent of the voting share supported the repayment plan. Those opposing it represented less than 20 per cent.
The NCLT therefore gave considerable importance to the decision of the majority of creditors.
In insolvency law, creditors are generally expected to assess whether a proposed plan gives them the best practical recovery available. The tribunal does not normally replace that commercial decision with its own view simply because it believes a different amount would be better.
Did The NCLT Think ₹6.5 Crore Was Enough?
No.
This is an important point for readers.
The NCLT’s decision should not be understood as saying that ₹6.5 crore is a fair repayment for ₹22,006 crore of claims.
Instead, the tribunal considered whether creditors were likely to recover more if the repayment plan was rejected.
The tribunal examined Chandra’s personal financial position and the assets available to him. It found that his assets were considerably limited compared with the claims against him.
Therefore, forcing him into bankruptcy could potentially result in creditors recovering even less.
In simple words, the question was:
“Is ₹6.5 crore better than what creditors are likely to receive if this plan fails?”
The tribunal concluded that the answer was effectively yes.
How Did The Insolvency Proceedings Begin?
The roots of the case go back to the ₹170-crore loan given to Vivek Infracon.
Chandra had provided a personal guarantee for the loan. After the loan defaulted, action was initiated against him.
The insolvency process eventually reached the NCLT.
There was also an earlier attempt to settle the dispute, but that arrangement did not ultimately materialise.
The legal position regarding personal guarantors became particularly important after the Supreme Court upheld the relevant IBC provisions in November 2023. The insolvency proceedings against Chandra were subsequently revived in February 2024, before being formally admitted by the NCLT in April that year.
Why Was There A Split Decision?
The NCLT’s original two-member bench did not reach the same conclusion.
Because the two members differed in their views, the matter was referred to a third member, Nilesh Sharma, who was appointed by the NCLT president to resolve the disagreement.
Sharma ultimately approved the repayment plan under Section 114 of the Insolvency and Bankruptcy Code.
His decision relied heavily on the fact that creditors holding 80.81 per cent of the voting share had backed the proposal.
However, the decision is not yet the final consequential order. The matter has been sent back to the regular bench for further directions.
What Happens To The Remaining ₹22,000 Crore?
One of the biggest misunderstandings about the case is that creditors will somehow receive the remaining ₹22,000 crore later.
That is not what the approved repayment plan means.
The insolvency process determines how much creditors can recover from the assets and financial resources available from the guarantor under the approved plan.
If the plan is implemented, creditors cannot simply demand another ₹22,000 crore under the same insolvency settlement.
This is why the case has become important for lenders dealing with personal guarantees.
What Is A Personal Guarantor?
A personal guarantor is someone who promises to support repayment of a loan if the main borrower defaults.
Banks often seek personal guarantees from company promoters because they provide an additional layer of security.
However, giving a guarantee does not mean the guarantor necessarily has enough personal wealth to repay the entire loan.
For example, a promoter could guarantee hundreds or thousands of crores in company borrowing while having far fewer assets personally.
That is an important distinction in Chandra’s case.
What Has Subhash Chandra Said?
Chandra has maintained that he did not personally borrow the huge amounts involved in the claims.
He has said that he provided personal guarantees for loans taken by companies connected with the Essel Group.
According to his statement, companies for which he had given guarantees had borrowed almost ₹45,000 crore as of January 2019, of which around ₹43,000 crore had subsequently been repaid. These figures, however, could not be independently verified by Mint.
Chandra has also stated that his net worth was approximately ₹31.79 crore in 2024, including a house valued at around ₹25 crore.
His position is that the repayment plan reflects what he can actually pay from his personal assets.
What About The Allegations Involving Other Creditors?
Another issue was raised regarding the claims of five entities — Veena Investments, Direct Media Distribution Ventures, World Crest Advisors, Lemonade Capital Advisors and Corpcall Capital Advisors.
A respondent had alleged that the resolution professional wrongly admitted their claims and that these entities collectively accounted for 61.78 per cent of the voting share, helping the repayment plan secure the required majority.
The tribunal, however, found no evidence establishing the entities as related parties.
Chandra’s office also said on Friday that the companies belonged to Jawahar Goel, his younger brother, and that their business interests had been separated during a family business division in 2008-09.
Why Is This Case Important?
The Subhash Chandra case is bigger than just one businessman or one repayment plan.
It raises a broader question about personal guarantees and creditor recovery in India.
Data from the Insolvency and Bankruptcy Board of India cited in the source material shows that, as of June, creditors had recovered around 1 per cent of their admitted claims against personal guarantors since FY20.
Of 2,137 proceedings in which resolution professionals had been appointed, only 64 resulted in approved repayment plans.
This shows why a personal guarantee does not automatically mean that a lender will recover the full amount.
As lawyer Dikshat Mehra of Rajani Associates explained, “Accountability is distinct from recovery.”
In other words, the law can establish that a guarantor is responsible for a liability, but the amount actually recovered depends heavily on the guarantor’s available assets and the insolvency process.
What Happens Next For Subhash Chandra?
The NCLT’s approval of the ₹6.5-crore repayment plan marks an important development, but the legal process is not completely over.
The matter will return to the regular NCLT bench for further directions and the formal consequential order.
If the repayment plan is finally implemented in accordance with the tribunal’s directions, Chandra could eventually complete the personal insolvency process and exit insolvency.
For creditors, however, the case highlights a difficult reality: having a large claim against a personal guarantor does not necessarily mean being able to recover a large amount of money.
The striking difference between ₹22,006.57 crore in admitted claims and a ₹6.5-crore repayment plan has therefore turned the Subhash Chandra insolvency proceedings into an important case for understanding how personal guarantor insolvency works in India.
