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On 12 September 2026 the Insolvency and Bankruptcy Board of India (IBBI) issued a discussion paper proposing four amendments to the IBBI (Insolvency Resolution Process for Personal Guarantors to Corporate Debtors) Regulations, 2019. Comments are due by 3 October 2026.
Related-party creditors of a personal guarantor would get a 'Nil' voting share on the repayment plan, matching the bar on related parties in the corporate insolvency process.
Before creditors vote, the resolution professional would have to examine preferential, undervalued, fraudulent and extortionate transactions and appoint a registered valuer to fix the fair and realisable value of the guarantor's assets.
Creditors would have to record their deliberations and reasons, especially when the plan offers far less than admitted claims.
The proposals follow the Subhash Chandra case. On 25 August 2026 an NCLT single bench approved a plan offering about ₹6.25 crore against admitted claims of ₹22,006.57 crore, and a five-member bench stayed that order on 1 September.
| Proposal | What changes | Gap it closes |
|---|---|---|
| 1. Related parties barred from voting | Related-party creditors get a 'Nil' voting share (regulations 9 and 11) | Only 'associates' are barred now, so connected entities can back a lowball plan |
| 2. Avoidance transactions examined | The RP examines and reports preferential, undervalued, fraudulent and extortionate transactions before the vote (new regulation 10A) | Unlike CIRP, no such check happens before the repayment plan is voted on |
| 3. Independent asset valuation | The RP appoints a registered valuer to fix fair value and realisable value; the report goes to creditors with the plan (new regulation 10B) | Creditors cannot currently judge whether the plan beats going to bankruptcy |
| 4. Reasons recorded | Creditors' deliberations, objections and reasons must be recorded (regulation 15(2A)) | Plans offering far below claims or asset value get approved without scrutiny |
Governs insolvency of personal guarantors to corporate debtors, including the application (Sections 94-95) and avoidance of undervalued, preferential and extortionate transactions (Sections 164, 165, 167)
Defines 'related party' in relation to an individual; the proposal uses this wider definition to bar voting
Bars a financial creditor that is a related party of the corporate debtor from the Committee of Creditors: the corporate-process protection the proposal copies
Brought the personal guarantor provisions into force from 1 December 2019
Upheld the 2019 notification; approval of a corporate resolution plan does not discharge a personal guarantor's liability
Upheld the constitutional validity of Sections 95 to 100 of the IBC
Regulator under the IBC for insolvency professionals, agencies and information utilities; frames regulations for insolvency processes
Adjudicating authority for corporate insolvency and for insolvency of personal guarantors to corporate debtors
Administers the IBC and notified the personal guarantor provisions
GS Paper III > Indian Economy > Banking, NPAs and the Insolvency and Bankruptcy Code
Banking Awareness > IBC, NCLT and IBBI
An individual, often a promoter, who guarantees a company's loans and can be proceeded against under Part III of the IBC
Preferential, undervalued, fraudulent or extortionate transactions that can be reversed to recover value for creditors
The amount an asset would actually fetch on sale, as against its fair value