Part III — Insolvency Resolution for Personal Guarantors to Corporate Debtors

The only operational segment of individual insolvency under the Code so far — personal guarantors, following the Supreme Court's 2021 validation.

Scope of the notified Part III

Only the provisions applicable to "personal guarantors to corporate debtors" within Part III have been notified and operationalised (November 2019) — general individual/partnership-firm insolvency (the rest of Part III) remains un-notified, so a purely personal debt or an ordinary partnership-firm default is not yet covered by the Code's formal insolvency machinery.

Process for personal guarantors

A creditor or the guarantor may apply for insolvency resolution of the personal guarantor via a Resolution Professional appointed by DRT, following a repayment-plan-first structure distinct from CIRP's CoC-driven process — the RP examines the application and prepares a report before DRT admits or rejects it.

Lalit Kumar Jain v. Union of India (2021)

The Supreme Court upheld the notification bringing personal guarantors within the Code, confirming that a corporate debtor's approved resolution plan does NOT automatically discharge the personal guarantor's liability — the guarantor's own insolvency process runs independently, a point frequently misunderstood in practice.

Educational summary of the Insolvency and Bankruptcy Code, 2016, its Regulations and case law as understood at review date 2026-07-18. Not a substitute for the official Code/Regulations text, current NCLT/NCLAT/Supreme Court rulings, or professional advice on a specific matter.

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