On August 25, 2026, the National Company Law Tribunal approved a repayment plan in the personal guarantor insolvency of Zee and Essel Group founder Dr. Subhash Chandra.[1] Against admitted claims of Rs 22,006.57 crore, the approved plan directs Rs 6.25 crore to creditors and a further Rs 25 lakh towards insolvency-process costs, a haircut of nearly 99.97 per cent. Exactly one week later, on September 1, 2026, a specially constituted five-member bench of the NCLT stayed that approval, holding that no majority view had emerged from the fractured course the matter has taken, and restrained the guarantor from alienating any assets, directly or indirectly, pending further hearing.[2]

The matter has drawn considerable attention, not only for the scale of the shortfall but for what it signals about the broader machinery of personal guarantor insolvency under the Insolvency and Bankruptcy Code, 2016. Viewed in isolation, the outcome might read as an anomaly. Viewed against the data, it looks closer to a pattern.

A Framework Tested at Scale

Sections 94 and 95 of the IBC introduced a distinct insolvency track for personal guarantors to corporate debtors, separate from the corporate insolvency resolution process that applies to the underlying company. The design intent was clear: a resolution plan that settles a company’s debt, even with a significant haircut accepted by creditors, does not by itself extinguish a guarantor’s personal liability for the shortfall. The two processes can run in parallel, and creditors are not required to wait for the company’s resolution to conclude before initiating proceedings directly against the guarantor.

Data from the Insolvency and Bankruptcy Board of India shows how this framework has performed in practice. As of June 2026, more than 2,100 personal guarantor insolvency cases had a resolution professional appointed. Of these, only 64 had resulted in an approved repayment plan. Where plans have been approved, aggregate creditor recovery stands at approximately Rs 234.56 crore, roughly 1 per cent of admitted claims across those cases.

Set against this backdrop, the Subhash Chandra matter is not an outlier so much as a magnified instance of a trend already visible in the underlying numbers.

The Valuation Question

A significant part of the scrutiny in this matter centres on valuation. The currently disclosed net worth is approximately Rs 31.79 crore, a steep decline from earlier certificates that placed net worth at Rs 45,888 crore (USD 7.17 billion, furnished to RBL Bank) in 2017 and Rs 40,562 crore (furnished to Canara Bank) in 2018.

Some of that decline plausibly reflects the ordinary, if painful, consequence of a leveraged corporate group unwinding: asset values compress, personal guarantees crystallise, and paper wealth tied to now-distressed entities evaporates. But the scale and speed of the decline is precisely the kind of gap that a personal guarantor insolvency process is meant to interrogate, through asset tracing, valuation scrutiny, and creditor participation, before a repayment plan is approved.

Where valuation exercises are seen as insufficiently rigorous, or timelines allow substantial gaps between the events that precipitated financial distress and the eventual insolvency filing, the resulting repayment plans risk being read as closure mechanisms rather than genuine recovery outcomes.

Why This Matters Beyond One Matter

The personal guarantor provisions of the IBC were introduced specifically to prevent promoters from using the corporate veil to insulate personal wealth while corporate creditors absorbed the loss. The data on recovery rates suggests that, four years into meaningful use of this framework, that objective is only partially being realised.

For creditors, insolvency professionals, and promoters alike, cases such as this one raise practical questions that extend well beyond the individual matter: how rigorously are guarantor asset valuations being tested at the point of filing, what accounts for the gap between default and resolution in cases that stretch across years, and how much genuine leverage do creditors have in shaping the terms of a repayment plan before it reaches the Tribunal for approval.

These are not questions with easy answers, and the IBC’s personal guarantor framework remains comparatively young relative to the corporate insolvency process it sits alongside. But as more matters move through this track, and as the recovery data accumulates, the case for closer scrutiny of how these proceedings are conducted, and potentially for legislative or procedural recalibration, becomes harder to set aside.

From the Lens of IBC Practitioners

For practitioners, the first striking feature of the matter is its procedural anatomy, which is without precedent in personal guarantor jurisprudence. The Section 95 petition, filed by Indiabulls Housing Finance in 2022, remained in abeyance while the constitutional challenge to Sections 95 to 100 was pending (the Supreme Court, which upheld those provisions in Dilip B. Jiwrajka v. Union of India,[3] vacated its interim order in the guarantor’s writ petition in April 2024) and was admitted on April 22, 2024. The repayment plan cleared the meeting of creditors with an 80.814 per cent vote. Yet on September 3, 2025, the division bench split: the Judicial Member approved the plan while observing that dissenting creditors could pursue their remedies for the remaining debt, whereas the Technical Member rejected it altogether, citing irregularities in the admission of claims and in voting.[4] The difference of opinion travelled, under Section 419(5) of the Companies Act, 2013, to a third member, who on August 25, 2026 approved the plan but held, contrary to the first Judicial Member, that under Section 115 the plan binds all creditors, assenting and dissenting alike, and further directed the exclusion of claims lodged through two individuals on behalf of 1,260 persons. When the consequential order came to be drawn, the referral bench concluded that even after the third member’s opinion no majority view existed on all issues, and made a fresh reference to the President, who constituted a five-member Special Bench. That bench, on September 1, 2026, stayed the third member’s order and froze the guarantor’s assets, listing the matter for September 23, 2026. The episode exposes an unresolved fault line in the Section 419(5) mechanism itself: the provision assumes a binary difference resolvable by a casting opinion, and offers no clear pathway where the third member agrees with one colleague on the operative result but differs on its legal consequences. Whether concurrence on outcome, without concurrence on reasoning and consequential directions, constitutes a “majority” is now squarely in issue, and its resolution will matter far beyond this case.

The second feature is the substantive core of the third member’s opinion, which, though presently stayed, frames the questions the Special Bench and, inevitably, the appellate courts must confront. Three holdings stand out. First, the expression “associate” in Section 79(2)(g) was read literally: the disqualification from voting under Section 109(4)(b) attaches only where the debtor, alone or with his associates, owns more than fifty per cent of the share capital or controls the board of the creditor entity. On that test, five entities commanding roughly 61.78 per cent of the voting share could not be excluded, even though the order candidly records that they are “controlled directly or indirectly by the individuals related to the PG.” The contrast with Part II of the Code is stark: the wider “related party” definitions in Sections 5(24) and 5(24A), and the proviso to Section 21(2) which strips related-party financial creditors of voting rights in the committee of creditors, have no counterpart in Part III. The third member treated this as a deliberate legislative choice, invoking the rule against reading a casus omissus into plain language, and left any correction to Parliament. Second, the opinion holds that neither a forensic audit nor an asset-tracing exercise is a mandatory precondition to consideration of a repayment plan: the resolution professional under Chapter III of Part III is not constituted an investigating authority, unlike the bankruptcy trustee under Section 149, the liquidator under Section 35(1)(l), or the CIRP resolution professional armed with Sections 43 to 51 and 66. The near-total collapse of the guarantor’s certified net worth was held to raise “a question requiring consideration” but not, without independent material, proof of concealment or diversion. Third, while the resolution professional was found to have committed statutory lapses, admitting wholly undocumented claims of 1,260 individuals on the guarantor’s own verbal assurance and convening the creditors’ meeting in breach of the timelines in Sections 106(4)(a) and 107(1), those lapses were held insufficient to vitiate the process. The opinion also rejects any secured-creditor veto under Section 110(5), and confines the Tribunal’s jurisdiction under Section 114 to testing statutory compliance rather than the commercial adequacy of the plan, importing into Part III something closely resembling the “commercial wisdom” deference of Part II, but without Part II’s accompanying safeguards.

Taken together, these holdings lay bare the structural asymmetry between the two Parts of the Code. Part III contains no analogue of Section 30(2)(b)’s liquidation-value floor for dissenting creditors, no related-party exclusion from voting, no prescribed valuation of the guarantor’s estate by registered valuers, and no investigative mandate before a plan is put to vote. The entire edifice rests on the debtor’s own disclosures, policed only by penal consequences for false statements and by the recall remedy the third member expressly preserved should concealed assets later surface. Where the votes that carry a plan can lawfully be cast by entities connected to the debtor, and where a 99.97 per cent haircut needs to clear only a process-compliance review, creditors are left to discover that the protections they take for granted in corporate insolvency simply do not travel with them into guarantor proceedings. For those advising lenders, the practical lessons are immediate: interrogate the list of creditors and voting eligibility at the earliest stage rather than after the vote; seek interim restraints on alienation of assets without waiting for the plan stage; place independent material, not merely stale net-worth certificates, before the Adjudicating Authority if concealment is to be alleged; and treat the guarantor’s statement of affairs as a document to be tested, not accepted.

Conclusion: What Lies Ahead

The immediate future belongs to the five-member Special Bench, which takes up the matter on September 23, 2026, with the third member’s approval stayed and the guarantor’s assets frozen. Whichever way it rules, on the validity of the reference mechanics, the associate-voting question, and the binding effect of the plan on dissenters under Section 115, an appeal to the NCLAT, and in all likelihood the Supreme Court, appears inevitable: each of these is a question of first impression, and the matter is well positioned to become for personal guarantor insolvency what Essar Steel was for corporate resolution, the crucible in which the framework’s ground rules are finally settled. The reform current is already running in the same direction. The IBC (Amendment) Act, 2026 has done away with the automatic interim moratorium in personal insolvency, and the IBBI’s July 2026 discussion paper proposes tighter valuation norms and process discipline; proposals for periodic audited net-worth reporting by guarantors, restrictions on asset transfers once default looms, and independent valuation of guarantor estates are gathering institutional support.

For future matters, the direction of travel seems clear. Expect legislative attention to Section 79(2)(g), whose narrow literalism the Chandra matter has made impossible to ignore; expect creditors to litigate voting eligibility and claim admission at the threshold rather than the tail end; and expect Adjudicating Authorities, chastened by the optics of this case, to scrutinise repayment plans and resolution professionals’ verification of claims with markedly greater rigour. If the Special Bench or the appellate courts ultimately endorse a wider reading of creditor protections in Part III, or if Parliament supplies one, the personal guarantee may yet recover some of its intended force. Until then, the numbers speak for themselves, and the closing observation bears repeating: a framework built for individual accountability is only as strong as the recoveries it actually delivers.

[1] Indiabulls Housing Finance Limited v. Dr. Subhash Chandra, Company Petition No. (IB)-97(ND)/2022, National Company Law Tribunal, New Delhi, Special Bench (Single Member) (Court-II), order dated 25.08.2026 in IA-5505/ND/2024 and connected applications, per Sh. Nilesh Sharma, Member (Judicial) — the third member to whom the difference of opinion was referred under Section 419(5) of the Companies Act, 2013.

[2] Indiabulls Housing Finance Limited v. Dr. Subhash Chandra, IB-97/ND/2022, National Company Law Tribunal, New Delhi, Special Principal Bench, order dated 01.09.2026 (Coram: Justice Anupinder Singh Grewal, President; Sh. Bachu Venkat Balaram Das, Member (Judicial); Sh. Mahendra Khandelwal, Member (Judicial); Sh. Atul Chaturvedi, Member (Technical); Sh. Ravindra Chaturvedi, Member (Technical)), staying the order dated 25.08.2026 and restraining alienation of assets; matter listed on 23.09.2026.

[3] Dilip B. Jiwrajka v. Union of India, Writ Petition (Civil) No. 1281 of 2021, judgment dated 09.11.2023 (Supreme Court of India), upholding the constitutional validity of Sections 95 to 100 of the Insolvency and Bankruptcy Code, 2016.

[4] Dissenting judgments dated 03.09.2025 of the Division Bench (Court-II, NCLT, New Delhi) — Sh. Ashok Kumar Bhardwaj, Member (Judicial), approving the repayment plan, and Smt. Reena Sinha Puri, Member (Technical), rejecting it — as recorded in the order dated 01.09.2026, supra note 2.

The article has been authored by Neeha Nagpal & Vishvendra Tomar, Partners.