Archive · 13 Sep 2026
IBBI Proposes Stricter Safeguards for Personal Guarantor Insolvency
India’s insolvency regulator wants to change how repayment plans for personal guarantors are reviewed.
A personal guarantor promises to repay a company’s loans if the company does not pay.
The proposed rules would stop people connected to the guarantor from voting on the repayment plan.
An independent valuer would assess the guarantor’s property and other assets.
Creditors would receive those values before deciding what to do.
The professional managing the process would also look for suspicious transactions.
Creditors would need to write down why they approved or rejected a plan, especially when it offered much less than the claims.
The proposals followed a dispute over Subhash Chandra’s repayment plan, although the reported claim amount is contested.
The IBBI proposed assigning related parties of personal guarantors zero voting share on repayment plans.
A registered valuer would assess guarantors’ assets and report their fair and realisable values to creditors.
Resolution professionals would identify and report preferential, undervalued, fraudulent and extortionate credit transactions.
Creditors would have to record their deliberations and reasons for approving or rejecting repayment plans.
The proposals follow the disputed Subhash Chandra repayment plan, involving about Rs 6.25-6.5 crore against claims cited at roughly Rs 22,000-22,006 crore.
- Who
- The Insolvency and Bankruptcy Board of India, resolution professionals, creditors and Subhash Chandra are central to the matter.
- What
- The IBBI proposed amendments to the insolvency resolution process for personal guarantors to corporate debtors.
- When
- The discussion paper was issued on September 12, with comments invited until October 3; one article was published on September 13, 2026. The related tribunal proceedings occurred in late August and on September 1, according to the reports.
- Where
- The proposals concern India’s insolvency process, while the related proceedings involve the National Company Law Tribunal in New Delhi and the National Company Law Appellate Tribunal.
- Why
- The IBBI said the measures would strengthen safeguards, improve creditor decision-making and increase scrutiny of guarantors’ assets and transactions.
IBBI and Creditor-Safeguard Arguments
Subhash Chandra’s Position
Voting by related parties
IBBI and Creditor-Safeguard Arguments
The IBBI says connected parties should not be able to influence a vote on a repayment plan from which the connected debtor could benefit.
Subhash Chandra’s Position
The reports do not provide a separate substantive defence from Chandra on the proposed voting rule.
Repayment-plan scrutiny
IBBI and Creditor-Safeguard Arguments
The IBBI wants asset valuations, avoidance-transaction information and recorded commercial reasons before creditors approve a substantially discounted plan.
Subhash Chandra’s Position
Chandra’s repayment plan was challenged by dissenting lenders, and the reports say it was subsequently stayed by a larger NCLT Bench.
Amount of claims
IBBI and Creditor-Safeguard Arguments
The reported plan offered about Rs 6.25-6.5 crore against claims cited at roughly Rs 22,000-22,006 crore.
Subhash Chandra’s Position
Chandra argues that the Rs 22,006-crore figure does not represent money he personally borrowed; he says it includes claims from guarantees for Essel Group company loans and places the personal guarantee claims at about Rs 3,990 crore.
- Regulator
- Insolvency and Bankruptcy Board of India (IBBI)
- Proposed voting rule
- A related party of a personal guarantor would receive a nil voting share and be separately identified in the creditors’ list.
- Asset valuation
- A registered valuer would determine the guarantor’s fair value and realisable value of assets.
- Creditor records
- Resolution professionals would record creditors’ deliberations and reasons for decisions on repayment plans.
- Avoidance transactions
- Resolution professionals would examine and report possible preferential, undervalued, fraudulent and extortionate credit transactions.
- Chandra repayment plan
- Reports describe proposed creditor recovery of about Rs 6.25-6.5 crore against admitted claims of roughly Rs 22,000-22,006 crore.
- Public consultation
- Stakeholders were invited to submit comments on the proposed amendments by October 3.
