IBBI Amends Resolution Process Regulations For Personal Guarantors

The Insolvency & Bankruptcy Board of India (IBBI) amended the regulations related to insolvency resolution process for personal guarantors and bankruptcy process for personal guarantors to corporate debtors.

The amendment removes the restrictions on an insolvency professional to be appointed as resolution professional (RP) or bankruptcy trustee in the insolvency resolution process or bankruptcy process of personal guarantors to corporate debtors respectively, if she has acted or is acting as interim resolution professional, RP or liquidator during the corporate insolvency resolution process or liquidation process of the corporate debtor, the IBBI said in a statement.

The insolvency regulator said the removal of this restriction will allow the appointment of same insolvency professional in both the corporate process as well as the insolvency and bankruptcy proceeding of the personal guarantors to corporate debtors for better harmonization and effective coordination of both the processes.

The IBBI said the amendment also makes the convening of meeting of creditors mandatory to address complexities and unique challenges inherent in the personal guarantor cases.

This mandatory involvement of creditors brings a comprehensive and collaborative approach to the resolution process, enhancing the efficacy and fairness of the system, it added.

The regulator noted the amendment intends to foster active participation and cooperation among all stakeholders, thereby reinforcing a robust and equitable framework for addressing financial distress in personal guarantor cases.

The Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Personal Guarantors to Corporate Debtors) (Amendment) Regulations, 2024 and Insolvency and Bankruptcy Board of India (Bankruptcy Process for Personal Guarantors to Corporate Debtors) (Amendment) Regulations, 2024 are effective from 31 January.

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