Application, interim moratorium, repayment plan and bankruptcy
Reviewed by Ravi Sisodia · Last reviewed 29 August 2026
The distinct process for personal guarantor insolvency under Part III of the IBC: application, interim moratorium, repayment plan, and bankruptcy.
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The distinct process for personal guarantor insolvency under Part III of the IBC: application, interim moratorium, repayment plan, and bankruptcy.
Official source and legal ownership
What this covers
Part III of the IBC establishes a separate insolvency process for individuals, including personal guarantors to corporate debtors - a materially different structure from the corporate CIRP, built around an interim moratorium and a repayment plan rather than a resolution-plan/liquidation choice.
How the process works
Filing an application under Sections 94-95 triggers an interim moratorium protecting the guarantor from most creditor actions while a resolution professional examines the application (a stage the Supreme Court held in Dilip B. Jiwrajka v Union of India to be administrative rather than adjudicatory); if the application is admitted, the process moves toward a repayment plan the guarantor proposes and creditors vote on, and only where no repayment plan is agreed does the process move toward bankruptcy and estate distribution under the Code's bankruptcy provisions.
Why it matters
Because Lalit Kumar Jain v Union of India held that a personal guarantor's liability survives approval of the corporate debtor's own resolution plan, a guarantor cannot treat the conclusion of the principal borrower's CIRP as resolving their own, separate exposure under Part III - the two processes are legally independent even where they arise from the same underlying default.