New IBC rule to raise personal guarantors' role

EXPERTS SAID THAT the addition of this rule — Regulation 17B — is significant and will help address a critical lacuna by prescribing a definitive course of action for RPs with regard to personal guarantors.

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"The amendment ensures procedural continuity and mitigates the risk of undue delay or procedural stasis," said Amit Agarwal, partner at Nangia & Co.

The IBC lacked a clear directive when a personal guarantor fails to submit a repayment plan, and this has stalled the resolution process in many cases. The insolvency of personal guarantors, who are recognised as a specific category of individuals under the IBC, can be resolved independently but in coordination with the corporate insolvency resolution process (CIRP).