SumanSpeaks Capital Markets & Geopolitical Intelligence  ·  Estd 2006

Insolvency Law · Corporate Accountability

When the Law Works Exactly as Designed —
And Still Feels Wrong

₹22,006 crore in personal guarantees. Settled for ₹6.5 crore. Approved 80.81% to a minority that included two public sector banks — with the tribunal's own bench divided before a tie-breaking member stepped in.

Subhash Chandra (Goenka), founder of the Essel Group and promoter emeritus of Zee, has settled a personal guarantee liability of ₹22,006 crore for ₹6.5 crore. The National Company Law Tribunal approved the plan this week.

The case began small. In 2022, Indiabulls Housing Finance — now Sammaan Capital — moved against Chandra over a personal guarantee on a ₹170 crore loan to Vivek Infracon. By the time the insolvency plea was admitted in 2024, admitted claims against him had grown to ₹22,006.57 crore.

1	The Case File

Origin	₹170 crore personal guarantee, Vivek Infracon loan (2022)
Admitted claims	₹22,006.57 crore
Approved settlement	₹6.5 crore (₹6.25cr to creditors + ₹25 lakh process costs)
Effective haircut	~99.97%
Creditor vote	80.81% in favour
Opposed	HDFC Bank, Axis Bank, Canara Bank, RBL Bank, Union Bank of India, LIC Housing Finance
Bench	Judicial & Technical Members split; third member cast the deciding vote
Disputed net worth	₹45,888cr (2017) / ₹40,562cr (2018) vs ₹31.79cr (submitted, present)

This was not a quiet rubber stamp. Judicial Member Ashok Kumar Bhardwaj and Technical Member Reena Sinha Puri disagreed on whether the plan should be approved. The NCLT President had to bring in a third member, Nilesh Sharma, whose vote decided the outcome under Section 114 of the IBC.

Five lenders opposed the settlement outright — HDFC Bank, Axis Bank, Canara Bank, RBL Bank, and Union Bank of India — alongside LIC Housing Finance, which had an admitted claim of ₹1,322.39 crore and was offered ₹38.09 lakh in return. Two of those objecting lenders are public sector banks. They were outvoted. Under Section 115 of the IBC, the approved plan now binds every creditor, including the ones who rejected it.

A net worth that fell from ₹40,562 crore to ₹31.79 crore in under a decade is not a footnote. It is the question the settlement was supposed to answer, and did not.

2	The Legal Machinery, Minus the Jargon

The Insolvency and Bankruptcy Code, 2016 exists because India's old recovery system was slow and endlessly gameable. One of its deliberate features allows a personal guarantor's liability to be settled, even at a steep discount, once a resolution plan clears a creditor vote and tribunal sanction.

So the ₹6.5 crore figure is not a backdoor deal. It is the Code working exactly as written, on the logic that a smaller certain recovery can beat a larger, uncertain one from years of litigation against a guarantor with dwindling declared assets. That is precisely what makes the outcome so uncomfortable.

This is also not an isolated pattern this year. In March 2026, the NCLT approved a resolution plan for Jaiprakash Associates Ltd — a separate case, involving a listed corporate debtor rather than a personal guarantee, but built on the same underlying tension: steep write-downs, and the question of who bears them, this time touching shareholders and homebuyers rather than a single promoter's guarantee.

3	The Ordinary Contrast

A salaried borrower who misses two EMIs on a personal loan faces recovery calls, penalty interest, and a battered credit score within weeks. Here, a personal guarantee spanning ₹22,006 crore closed for a sum close to the price of a well-appointed Mumbai apartment. Nobody broke the law in either case. But the distance between the two outcomes is the entire point of the discomfort.

4	The Questions That Don't Go Away

Would an individual who personally guaranteed even ₹50 crore get the same 99.97% discount, or does scale itself buy leniency.

When a guarantor's declared net worth falls this far this fast, why is a documented gap alone not enough to trigger a forensic audit before the vote, rather than after the settlement is signed.

Two public sector banks objected and were outvoted. If that recovery gap eventually shows up on their books, who ultimately absorbs it — the bank, or the depositor and taxpayer standing behind it.

Does a bench needing a tie-breaking member tell us the system had genuine doubts too, just not enough to change the outcome.

5	The SumanSpeaks Verdict

Courts rule on whether the process was followed. Citizens judge whether the outcome feels fair. Here, both readings are defensible, and that gap is the real story.

The IBC was built to bring discipline to corporate failure, not to hand promoters a clean exit while public sector lenders object and get outvoted anyway. A small borrower who defaults still faces the full weight of recovery — penalty interest, asset attachment, a wrecked credit score. Here, a guarantee worth thousands of crores dissolved for a fraction of a percent. Trust erodes not because anyone broke a rule, but because the threshold for scrutiny seems to shrink as the number grows larger.

Finally, the numbers here are public and the process was followed to the letter. The open question — for the NCLT, the IBBI, and Parliament, not just for this one case — is why a 99.97% haircut on a documented net-worth collapse needed no mandatory forensic check before the vote. That is not a demand to reverse a lawful order. It is a request that the next one be scrutinised before approval, not debated after.

At SumanSpeaks, we believe that laws are judged in courts — but justice is ultimately judged in the hearts of citizens.

This article is published by SumanSpeaks for general informational and educational purposes only. The author has over 25 years of capital markets experience. This is not a recommendation to buy, sell, or hold any security, and no company mentioned here is being assessed as an investment. All data is sourced from public exchange filings, regulatory orders (NCLT/IBBI), and credible financial media. Readers must conduct independent due diligence before drawing conclusions.

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