By S&S Co. Advocates & Solicitors · Published 20 September 2026 · Informational content, not legal advice — see our disclaimer
A Separate Track From Corporate CIRP
Insolvency proceedings against a personal guarantor to a corporate debtor are initiated before the NCLT — not the DRT — either by the creditor under Section 95 or voluntarily by the guarantor under Section 94, once default crosses the minimum threshold of Rs. 1 crore under Section 60(1). This individual insolvency track under Part III of the IBC is procedurally and jurisdictionally separate from the corporate insolvency resolution process under Part II that resolves the underlying corporate debtor's own insolvency — the two proceed on parallel, distinct tracks even where they arise from the same underlying default.
The Interim Moratorium
Filing an application under Section 95 or 94 triggers an interim moratorium under Section 96, immediately pausing legal actions against the guarantor's assets pending the resolution professional's report. However, an amendment inserting Section 96(4) — excluding personal guarantors from this interim moratorium in specified circumstances — has been the subject of recent litigation over whether it applies retrospectively to proceedings already pending when it took effect, so guarantors and their counsel should confirm the current, litigated position on this point before assuming the moratorium is automatically available or automatically excluded.
What Happens After Filing
The NCLT appoints a resolution professional within 7 days of the application; the RP examines the guarantor's financial position and submits a report within 10 days recommending admission or rejection of the application. Once admitted, a permanent moratorium — commonly cited at around 180 days — begins, creditors are invited to file claims via public notice, and a repayment plan process follows, distinct from the corporate CIRP's resolution plan mechanism.
Resolution Plan Approval Doesn't Automatically Discharge the Guarantor
The Supreme Court has held that approval of a resolution plan for the corporate debtor does not automatically discharge a personal guarantor's independent liability, so guarantors can face parallel exposure even after the company's CIRP concludes and a resolution plan takes effect. Guarantors should not assume that once the underlying company's insolvency is resolved, their own personal guarantee exposure automatically disappears along with it.
Frequently Asked Questions
Where are personal guarantor insolvency proceedings filed?
Before the NCLT, not the DRT — either by the creditor under Section 95 or voluntarily by the guarantor under Section 94, once default crosses the minimum threshold of Rs. 1 crore.
Does approval of the company's resolution plan discharge the personal guarantor?
No. The Supreme Court has held that approval of a resolution plan for the corporate debtor does not automatically discharge a personal guarantor's independent liability — guarantors can face parallel exposure even after the company's CIRP concludes.
What happens once a personal guarantor's insolvency application is admitted?
A permanent moratorium (commonly around 180 days) begins, creditors are invited to file claims via public notice, and a repayment plan process follows, separate from the corporate CIRP's resolution plan mechanism.
References & Further Reading
This article references the following statutory provisions. Readers should always verify current rules, fees and timelines against the applicable statute and rules as amended, since these are revised from time to time.
- Insolvency and Bankruptcy Code, 2016, Part III, Sections 60, 94, 95, 96 and 100-115, as amended.
- Judicial guidance on the retrospective application of the Section 96(4) amendment excluding personal guarantors from the interim moratorium, which should be confirmed for its current status at the time of reliance.