Is it permissible for a debtor merchant to demand that his debts be waived from the Zakat of his creditors’ wealth, given that he is in debt and unable to repay them?

The majority of scholars hold that it is not permissible to waive debts owed by a debtor and count them as Zakat. However, it is permissible for the debtor to repay his debts from Zakat funds given to him, provided there is no condition from the Zakat payer that the money be used specifically for debt repayment.