HDFC Bank is considering challenging an insolvency ruling that approved a settlement for Zee Group founder Subhash Chandra, under which creditors with admitted claims of more than Rs 22,006.57 crore are set to receive a total of only Rs 6.5 crore.

The proposed settlement translates into a recovery of roughly 0.03% of the total claims and an effective haircut of about 99.97% for creditors. While the resolution plan received the support of a majority of creditors, HDFC Bank, which voted against it, has said it is exploring an appeal before the National Company Law Appellate Tribunal, The Economic Times reported.

The Mumbai bench of the National Company Law Tribunal (NCLT) approved the repayment plan, rejecting objections raised by dissenting creditors. The tribunal cited the value of the debtor's estate and the possibility of future recovery while upholding the commercial decision taken by the majority of creditors.

HDFC Bank said on Thursday (August 27) that its admitted claim in the insolvency proceedings amounted to Rs 680 crore, or around 3.2% of the total claims.

The exposure was inherited from HDFC Ltd following the merger of the two entities.

“With regard to the referred NCLT matter, HDFC Bank’s admitted claim was only 3.2% of the total stated amount. The bank inherited this facility, which was previously provided by HDFC Limited. HDFC Bank had opposed this settlement and voted against the resolution, which was approved by the majority. The bank is exploring an appeal at NCLAT,” the lender said in a statement.

The insolvency proceedings against Chandra began in 2024 after Indiabulls Housing Finance moved the NCLT. Chandra had provided a personal guarantee for loans taken by Essel Group-linked companies, following which several creditors lodged claims against him amounting to more than Rs 22,000 crore.

The NCLT's approval of the plan means that Chandra will avoid being pushed into bankruptcy under the personal insolvency process.

However, the scale of the haircut has led to objections from some creditors, who questioned whether Chandra's assets and financial dealings had been subjected to adequate scrutiny.

Concerns were also raised over whether a forensic investigation should have been ordered to examine the debtor's financial affairs and determine the possibility of recovering a larger amount, The Indian Express reported.

The tribunal, however, declined to accept these objections and placed emphasis on the commercial wisdom of the creditors who had approved the resolution plan.

“The commercial decision of the creditors operates within, and not outside, the statutory framework,” the NCLT observed.

According to reports, the repayment proposal received the backing of creditors holding around 80.81% of the voting share. The tribunal held that once a plan has secured the required majority under the Insolvency and Bankruptcy Code, dissenting creditors cannot independently seek to withdraw from the process or insist on a different settlement.

“If the plan is approved and the debtor’s insolvency is resolved, putting him back on his feet, the objectors would ultimately stand a better chance of recovering their debts directly from the Principal Debtors,” the NCLT ruled.

HDFC Bank's proposed appeal could now bring the settlement before the appellate tribunal, where the extraordinary gap between the more than Rs 22,000 crore in claims and the Rs 6.5 crore repayment approved under the resolution plan is likely to remain at the centre of the dispute.