Canara Bank, Union Bank, and LIC Housing Finance have appealed to the NCLAT to block Subhash Chandra’s personal insolvency plan. The proposal offers creditors only Rs 6.5 crore against a massive debt claim of Rs 22,006 crore. Lenders allege the approval process was skewed by family-linked entities, and the upcoming tribunal hearing will determine the future of this resolution.
A group of major lenders, including Canara Bank, Union Bank of India, and LIC Housing Finance, has moved the National Company Law Appellate Tribunal (NCLAT) to challenge the approval of Subhash Chandra’s personal insolvency resolution plan. The appeal follows a controversial decision by the National Company Law Tribunal (NCLT) to accept the debt settlement proposal. Under this plan, the Essel Group chairman is expected to pay Rs 6.5 crore—which includes processing costs—to settle admitted claims totaling over Rs 22,006 crore. For the lenders, this represents a near-total loss on the personal guarantees provided for corporate debts.
The core of the dispute lies in how the resolution plan received its required majority approval. Dissenting creditors allege that the voting process was compromised by entities linked to the Chandra family. According to the appeal, five companies—Veena Investments, Direct Media Distribution Ventures, World Crest Advisors, Lemonade Capital Advisors, and Corpcall Capital Advisors—acted as proxies in the creditor committee. These entities reportedly held roughly 61.78% of the voting share, effectively allowing the plan to pass despite strong opposition from major financial institutions. The lenders argue that these companies should have been disqualified as related parties under the Insolvency and Bankruptcy Code (IBC).
Earlier, the NCLT had cleared the plan after a split verdict between its members, requiring a third member, Nilesh Sharma, to cast the deciding vote. In his reasoning, the third member noted that the debtor’s personal estate had limited value and suggested that moving toward full bankruptcy proceedings would likely yield even lower returns for the creditors. The tribunal emphasized that its primary function is not to replace the commercial decisions made by the committee of creditors, provided the legal requirements are met.
This case has drawn significant attention as it tests the boundaries of India’s insolvency regime regarding personal guarantees. For lenders and market participants, the outcome is critical as it could set a precedent for how personal liabilities and related-party voting are handled in future insolvency cases. The legal overhang has also been a point of concern for investors, with the share price of related entities like Zee Entertainment Enterprises facing pressure during periods of heightened legal uncertainty.
The NCLAT has scheduled a hearing for Tuesday, September 1, 2026, to review the arguments. The primary focus for stakeholders will be whether the appellate tribunal upholds the previous approval or finds merit in the lenders' claims that the voting process was unfair. The decision will determine whether the current settlement stands or if the personal insolvency process will be reopened for further scrutiny.