The Insolvency and Bankruptcy Board of India (IBBI) has invited public comments on draft rules, aiming to improve the corporate insolvency resolution process for personal guarantors.
A personal guarantor acts as a surety of payment for a corporate debtor, and the IBBI’s draft rules propose to strengthen them and introduce safeguards.
Concerns were raised over how creditors in the corporate debtor’s insolvency process did not have any safeguards when even the personal guarantor is insolvent.
To address this, the IBBI proposes amendments to the IBBI (Insolvency Resolution Process for Personal Guarantors to Corporate Debtors) Regulations, 2019. The amendments focus on four issues, including ensuring that a personal guarantor’s related entities are excluded from voting on any repayment plan.
The valuation of personal guarantor’s assets in the resolution process and recording creditors’ deliberations on a repayment plan are also proposed.
The proposed rules also suggest identifying and reporting any avoidance transactions that have occurred during the corporate debtor’s resolution process. These include preferential, undervalued, fraudulent and extortionate credit transactions, which are hidden or unfair dealings that a company undertakes before the insolvency process even begins.
When a resolution professional identifies such transactions, they can file an application to the authority to cancel them and recover assets for creditors.
Electronic comments must be submitted on the IBBI official website by 3 October 2026.
