The document summarizes key features of insolvency resolution for personal guarantors in India. An application can be filed by the guarantor or a creditor with the Debt Recovery Tribunal or National Company Law Tribunal if a corporate insolvency resolution process is already pending. A demand notice must be sent to the guarantor before filing. The application can be withdrawn before admission with applicant consent, or after admission with 90% creditor consent. An interim moratorium starts upon filing and a full moratorium for 180 days starts if admitted. Admitted applications require a repayment plan from the guarantor within 120-180 days.

1. Insolvency Resolution of
Personal Guarantor
Key Features

2. Who can file and
where
Application for the insolvency resolution of a personal
guarantor can be filed by (i) the guarantor, either personally
or through a Resolution Professional (“RP”), in Form A; or (ii)
by a creditor of such a personal guarantor, either personally
or through a RP in Form C. The Adjudicating Authority for
insolvency of a personal guarantor is the Debt Recovery
Tribunal (“DRT”).
However, if the CIRP of a CD is already pending with the
National Company Law Tribunal (“NCLT”), then the
insolvency petition for the personal guarantor ought to be
filed before the same NCLT. If the petition of insolvency
resolution of the personal guarantor predates the CIRP of
the CD, then such an application will be transferred to the
NCLT.

3. Demand Notice
Creditor to send a demand notice to the personal
guarantor in Form B, demanding payment in 14
days of service of notice.

4. Withdrawal of
Application
The DRT may permit withdrawal of the
application either (i) before its admission, on a
request made by the applicant or (ii) after its
admission, on the request made by the applicant,
if 90% of the creditors agree to such withdrawal.

5. Interim
Moratorium
Upon filing of the application, a moratorium
commences i.e., during such time any action or
proceeding pending in respect of the debt is
stayed and no proceedings can be initiated by a
creditor against the personal guarantor, for any
debt. Interim moratorium ceases upon admission
/ rejection of the application.

6. Admission or
Rejection
The appointed RP reviews the application and sends
his comments to DRT within 10 days of his
appointment recommending rejection or admission
of the application. Based on the RP’s report, DRT can
either admit or reject the application within 14 days
of the RP’s report. If the application is admitted, the
DRT can instruct negotiation between the guarantor
and the creditor for arriving at the repayment plan. If
the application is rejected due to the RP’s
recommendation or that the application is to defraud
the creditors, DRT would record that the creditor is
entitled to file for a bankruptcy of the guarantor.

7. Moratorium
Once the application is admitted, a moratorium is
applicable for 180 days. During this period, all
pending legal proceedings for any debt of the
personal guarantor are stayed, creditors cannot
initiate legal proceedings for any debt and the
guarantor cannot transfer, alienate, encumber or
dispose of any of the assets or his legal right or
beneficial interest.

8. Repayment
The guarantor along with the RP will prepare a
repayment plan with a proposal for restructuring of
debts. The proposal should contain a justification and
reason why creditors would agree to the proposed
plan and also provide for payment of fee to the RP.
While Insolvency Rules require the RP to submit the
plan and his report within 21 days from the last
submitted claim, the Insolvency Regulations require
this to be done before completion of 120 days from
the resolution process commencement date.

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