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Publication: Handbook on Personal Guarantors to Corporate Debtors under The Insolvency and Bankruptcy Code, 2016 by CIBC of ICAI
July, 12th 2021

Handbook on
Personal Guarantors to Corporate Debtors

under
The Insolvency and Bankruptcy Code, 2016

Committee on Insolvency & Bankruptcy Code
Handbook
on

Personal Guarantors to Corporate Debtors
under

The Insolvency and Bankruptcy Code, 2016

Committee on Insolvency & Bankruptcy Code

The Institute of Chartered Accountants of India

(Set up by an Act of Parliament)
New Delhi
© The Institute of Chartered Accountants of India

All rights reserved. No part of this publication may be reproduced, stored in a
retrieval system or transmitted in any form or by any means electronic,
mechanical, photocopying, recording or otherwise without prior permission in
writing from the publisher.

DISCLAIMER:

The views expressed in this book are of the author(s). The Institute of
Chartered Accountants of India may not necessarily subscribe to the views
expressed by the author(s).

The information cited in this book has been drawn from various sources.
While every effort has been made to keep the information cited in this book
error free, the Institute or any office of the same does not take the
responsibility for any typographical or clerical error which may have crept in
while compiling the information provided in this book.

Published In : June 2021
Committee on Insolvency & Bankruptcy
Committee/Department : Code

E-mail : cibc@icai.in

Website : www.icai.org
₹ 180/-
Price : 978-81-8441-
The Publication Directorate on behalf of
ISBN No : The Institute of Chartered Accountants of
India, ICAI Bhawan, Post Box No. 7100,
Published by : Indraprastha Marg, New Delhi - 110002.
Foreword

The Insolvency and Bankruptcy Code, 2016 was implemented with the
provisions relating to insolvency and liquidation of corporate persons coming
into force in December 2016. Implementation of individual insolvency and
bankruptcy was intended to be notified in a phased manner and accordingly,
Part III of the Code (i.e., Insolvency Resolution and Bankruptcy for
Individuals and Partnership Firms) for personal guarantors to corporate
debtors have been notified by the Central Government and the provisions
came into effect from 1st December 2019.

Given its intertwining nature, it becomes crucial that insolvency of the
Corporate Debtor as well as its guarantors are studied together wherever
required for fulfilment of insolvency resolution process and liquidation
process since it is quite common of giving personal guarantees for loans
taken by corporate debtor. Thereby, the insolvency proceedings of the
corporate debtor and personal guarantors are interlinked.

I commend the Committee on Insolvency & Bankruptcy Code of ICAI for
taking the initiative of bringing out the publication - Handbook on Personal
Guarantors to Corporate Debtors under the Insolvency and Bankruptcy
Code, 2016 to help the professionals in getting clarity on the applicability of
the provisions relating to Personal Guarantors under the Code.

I congratulate the entire Committee and particularly appreciate the efforts put
in by CA. Durgesh Kumar Kabra, Chairman, Committee on Insolvency &
Bankruptcy Code and CA. Prakash Sharma, Vice- Chairman, Committee on
Insolvency & Bankruptcy Code in bringing out this important publication at
this juncture.

I am confident that this publication would be of immense help to the
members, especially to insolvency professionals and other stakeholders.

CA. Nihar N. Jambusaria
President ICAI

Date: 27th June, 2021
Place: New Delhi
Preface

Since the enactment of The Insolvency and Bankruptcy Code, 2016 over the
last four years we all are aware how the Code is evolving continuously and
developments are taking place regularly for effective implementation of the
legislation.

As provided in Section 128 of Indian Contract Act, 1872, liability of a
guarantor is co-extensive with that of the principal borrower. It implies that if
the principal borrower defaults in repayment of debt to a creditor, the creditor
may choose to go after the guarantor for payment of debt. It accordingly has
been a natural corollary that the insolvency regime for personal guarantors to
corporate debtors were made available from 1st December, 2019. After the
commencement notification of provisions under Part III of the Code for
Personal Guarantors to Corporate Debtors, the Rules pertaining to
insolvency and Rules pertaining to bankruptcy for Personal Guarantors to
Corporate Debtors have been notified by Ministry of Corporate Affairs and
the Regulations for Personal Guarantors to Corporate Debtors have also
been notified by Insolvency and Bankruptcy Board of India.

Looking at the significance of this subject, the Committee on Insolvency &
Bankruptcy Code of ICAI as part of its initiative in bringing pertinent
publications in the insolvency resolution area has brought out this
publication – Handbook on Personal Guarantors to Corporate Debtors
under the Insolvency and Bankruptcy Code, 2016, so as to enable
understanding the application and intricacies of the provisions related to
personal guarantors under the Code.

We take this opportunity in thanking the President of ICAI, CA. Nihar N.
Jambusaria and Vice President of ICAI, CA. (Dr.) Debashis Mitra for their
encouragement and support in bringing out the publication.

We would like to thank all the Committee Members for their guidance in
bringing out this publication.

We would like to sincerely appreciate and thank the Group of Insolvency
Professionals- CA. Pradeep Kumar Kabra, CA. Dinesh Mundada, CA. Hajari
Lal Saini and CA. Pawan Kumar Jagetia who prepared the Draft of the
publication under the Convenorship and guidance of CA. Jay Chhaira,
Central Council Member, ICAI.
We appreciate the efforts put in by Shri Rakesh Sehgal, Director, Directorate
of Corporate and Economic Laws, ICAI, Ms. S. Rita, Secretary, Committee
on Insolvency & Bankruptcy Code, ICAI and the Committee Secretariat
comprising of CA. Himanshu Gulati and CA. Abhishek Tarun for providing
their technical and administrative support in bringing out this publication.

We are sure that the members of the profession, industries and other
stakeholders will find the publication very useful.

CA. Durgesh Kumar Kabra CA. Prakash Sharma
Chairman Vice-Chairman
Committee on Insolvency &
Bankruptcy Code, ICAI Committee on Insolvency &
Bankruptcy Code, ICAI

Date: 23rd June, 2021
Contents

Chapter 1 Introduction.......................................................................... 1
Chapter 2
Chapter 3 Highlights related to Insolvency and Bankruptcy
Chapter 4 Process for Personal Guarantors to Corporate Debtors
Chapter 5 under Insolvency and Bankruptcy Code, 2016 (IBC) ............. 4
Chapter 6
Provisions with respect to Insolvency Resolution Process
Chapter 7 for Personal Guarantors to Corporate Debtors under IBC .... 11
Chapter 8
Chapter 9 Provisions with respect to eligibility of RP for appointment
Chapter 10 and role of RP in Insolvency Resolution Process for
Chapter 11 Personal Guarantors to Corporate Debtors under IBC ......... 28

Provisions with respect to Bankruptcy Process for
Personal Guarantors to Corporate Debtors under IBC ......... 30

Provisions with respect to eligibility of Bankruptcy
Trustee for appointment, remuneration and role of
Bankruptcy Trustee in Bankruptcy Process for
Personal Guarantors to Corporate Debtors under IBC ......... 41

Provisions with respect to submission of various reports
by Bankruptcy Trustee during Bankruptcy Process for
Personal Guarantors to Corporate Debtors ......................... 50

Provisions with respect to proceeds of Bankruptcy
Process and distribution of proceeds .................................. 55

Offences and Penalties – For misconduct during
Insolvency and Bankruptcy Process for Personal
Guarantors to Corporate Debtors under IBC ....................... 71

Practical aspects related to the Insolvency and
Bankruptcy Process for Personal Guarantors to
Corporate Debtors under IBC ............................................. 73

Frequently Asked Questions on Insolvency and
Bankruptcy Process for Personal Guarantors to
Corporate Debtors under IBC ............................................. 77
Chapter 12 Case laws under Insolvency and Bankruptcy
Annexure Code, 2016 on Insolvency and Bankruptcy Process
References for Personal Guarantors to Corporate Debtors .................... 85

Forms under IBC, 2016 related to the Insolvency and
Bankruptcy Process for Personal Guarantors to
Corporate Debtors ............................................................. 94

........................................................................................ 129
Chapter 1

Introduction

The Insolvency and Bankruptcy Code, 2016 (hereinafter called as Code) was
passed by both the Houses of Parliament in May 2016 and the same has
been notified on 28th May, 2016. The Part II of the Code relating to
Insolvency Resolution and Liquidation for Corporate Persons came into
effect in December 2016. The Part III of the Code (i.e., Insolvency Resolution
and Bankruptcy for Individuals and Partnership Firms) for personal
guarantors to corporate debtors have been notified by the Central
Government and the provisions came into effect from 1st December 2019 as
a first step in phase-wise implementation of the said part of the Code.

Outline of Part III of the Code

Prior to enactment of the Code, the two key legislations which addressed the
insolvency and bankruptcy of individuals and partnership firms were the
Provincial Insolvency Act, 1920 (“Provincial Act”) and the Presidency -Towns
Insolvency Act, 1909 (“Presidency Act”). The Code was passed with the aim
of replacing these legislations and providing a consolidated statute for
insolvency of such persons, by enabling collective and timely resolution and
maximising value to creditors. The process provided in the Code is
significantly different from the framework provided in the Provincial and
Presidency Acts. While the Presidency Act applies to Chennai, Kolkata and
Mumbai, the Provincial Act applies to the rest of India.

The Insolvency and Bankruptcy Board of India (IBBI), vide an order dated
13th June, 2017, constituted a Former Working Group (FWG) to recommend
the strategy and approach for implementation of provisions relating to
insolvency and bankruptcy of individuals and partnership firms, under Part III
of the Insolvency and Bankruptcy Code, 2016.

It was decided that phase-wise implementation be undertaken for Part III of
the Code, and that insolvency resolution for personal guarantors to corporate
debtors be implemented to begin with.

Further, by an order dated 4th May, 2018, the IBBI formed a Reconstituted
Working Group (RWG) , under the chairmanship of Mr. P.K. Malhotra, to
recommend the strategy and approach for implementation of the provisions
HB on Personal Guarantors to Corporate Debtors under IBC, 2016

of the Code dealing with insolvency and bankruptcy in respect of (i) personal
guarantors to corporate debtors; (ii) partnership firms and proprietorship
firms; and (iii) other individuals.

The RWG was of the considered view that in the design and implementation
of an insolvency regime for the three classes of individuals, it is most likely
the case that one size does not fit all. Therefore, it has been decided to
propose a separate set of rules and regulations, and make other suitable
recommendations, for the strategy and approach for implementation of the
provisions of the Code dealing with insolvency and bankruptcy in respect of
each of the three classes of individuals to which the Code applies.

At the time of enactment of the Code, Part III of the Code was envisaged to
apply to partnership firms and individuals. However, an amendment was
made to Section 2 of the Code to distinguish applicability of Part III into three
categories of Individuals: (i) personal guarantors to corporate debtors; (ii)
partnership firms and proprietorship firms (“individuals with business”); and
(iii) other individuals (“individuals without business”). The Working Group
discussed that this amendment indicates that these three categories of
individuals have distinct peculiarities, characteristics and dynamics. It was
noted that though involvement of individuals is a common factor in these
categories, they may require slightly distinct treatment and processes in
insolvency.

The RWG noted that there are many common factors and linkages between
the corporate debtor and personal guarantors to such corporate debtors
under the Code. A ‘personal guarantor’ is defined in section 5(22) of the
Code and “means an individual who is the surety in a contract of guarantee
to a corporate debtor.” A contract of guarantee is defined under section 126
of the Indian Contract Act, 1872 as “a contract to perform the promise, or
discharge the liability, of a third person in case of his default.” The person
who gives the guarantee is called the ‘surety’, the person in respect of whose
default the guarantee is given is called the ‘principal debtor’, and the person
to whom the guarantee is given is called the ‘creditor’. Simply speaking,
therefore, a personal guarantee is a promise, given by an individual to
ensure that a third party fulfils its obligations and, if the third party fails to do
so, then such individual will be liable to fulfil those obligations.

The Working Group noted that giving personal guarantees for loans taken by
corporations is a prevalent practice in India. A personal guarantee is a

2
Introduction

contract whereby an individual becomes the surety for a loan taken by a
company or a limited liability partnership.
As per Section 128 of Indian Contract Act, 1872, liability of a personal
guarantor is co-extensive with that of principal debtor (here, corporate
debtor), unless the contract provides otherwise. This means that if the
principal debtor defaults in repayment of debt to the creditor, the creditor may
choose to go after the personal guarantor for repayment of her debt. Thus,
insolvency proceedings of a corporate debtor and its personal guarantor will
be closely linked to each other.
All the relevant provisions and sections were notified by the Government
related to personal guarantors to corporate debtors with effect from 1st
December, 2019.

3
Chapter 2

Highlights related to Insolvency and
Bankruptcy Process for Personal
Guarantors to Corporate Debtors
under Insolvency and Bankruptcy
Code, 2016 (IBC)

The Central Government has notified, that Part III of the Insolvency and
Bankruptcy Code, 2016 ("Code"), which is applicable to the personal
guarantors of a corporate debtor. The Code divides individuals falling un der
the Code into 3 categories, namely, personal guarantors to the corporate
debtor, partnership/ proprietor firms and other individuals. Central
Government in its notification dated 15th November, 2019, has notified the
provisions related to personal guarantors to the corporate debtor in the
Code. Central Government also notified the Insolvency and Bankruptcy
(Application to Adjudicating Authority for Insolvency Resolution Process for
Personal Guarantors to Corporate Debtors) Rules, 2019 and Insolvency and
Bankruptcy (Application to Adjudicating Authority for Bankruptcy Process for
Personal Guarantors to Corporate Debtor) Rules, 2019. The Insolvency and
Bankruptcy Board of India (Bankruptcy Process for Personal Guarantors to
Corporate Debtors) Regulations, 2019 and The Insolvency and Bankruptcy
Board of India (Insolvency Resolution Process for Personal Guarantors to
Corporate Debtors) Regulations, 2019 have also been notified by IBBI.

The said provisions, rules and regulations came into effect from
1st December, 2019. These Rules provide for the process and forms for
making application(s) for initiating insolvency resolution and bankruptcy
proceedings against personal guarantors to corporate debtors, withdrawal of
such applications, forms for public notice for inviting claims from the
creditors, etc.

The gist of the process specified under the IBC Code/ Rules is as follows:

• Application for initiating the Insolvency Resolution Process in respect
of personal guarantors is to be made either under section 94 (1) of the
Highlights related to Insolvency and Bankruptcy Process for PG to CD under IBC

Code by the Debtor himself along with Form A attached to the
application or the Creditor(s) can initiate the CIRP by filing an
application under section 95 (2) along with Form C attached. The
Application by creditors can be made after 14 days of receipt of
demand notice (Form B) by the Guarantor, if the Guarantor fails to
make such payments.

• If the application is made by a resolution professional ("RP"), the
Adjudicating Authority has to direct the Insolvency and Bankruptcy
Board of India ("IBBI") to confirm within 7 days that no disciplinary
proceedings are pending against the RP. Accordingly, the application
is moved forward.

• The application copy has to be provided to the RP within 3 days of his
appointment. One copy has to be submitted to the IBBI by the
applicant.

• The Insolvency Resolution Process for Guarantors, in terms of Section
96 provides for an “interim moratorium” in relation to any debts of the
Guarantor as soon as the application for insolvency under Section 94
or Section 95 is filed before the Adjudicating Authority, in addition to a
moratorium under Section 101 which comes into effect only upon
admission. This is a distinction from the CIRP regulations which
imposes a single moratorium period in relation to the assets of a
Corporate Debtor and only once the National Company Law Tribunal
(“NCLT”) passes an order imposing such moratorium on the admission
of an application filed before it.

• In the cases of personal guarantors, regardless of whether the
application against a guarantor is admitted by the Adjudicating
Authority or not, an interim moratorium shall immediately apply
preventing the enforcement of any debts of the guarantor and staying
any ongoing legal proceedings in relation thereto.

• Unlike issue of public notice by Interim Resolution Professional under
CIRP, the Adjudicating Authority itself issues the notice, under Section
102 of the Code, within seven days of passing the order under Section
100.

• Tantamount to a Resolution Plan, the Code requires that the
Guarantor in consultation with the RP, shall prepare a Repayment
Plan ("Plan") which shall, inter alia, provide for a restructuring

5
HB on Personal Guarantors to Corporate Debtors under IBC, 2016

mechanism for the debts owed by the Guarantor, justification for
preparation of such Plan and reasons on the basis of which the
creditors may agree upon the Plan.

• The Repayment Plan has to be submitted by the RP, as approved by
the creditors, within 120 days from the resolution process
commencement date.

• Upon the finalization of the Repayment Plan, the RP shall, within 21
days from the last date of submission of claims under Section 102,
submit the Plan to the NCLT along with a report requesting whether or
not a meeting of the creditors is required. In the event that a meeting
is required, the meeting of the creditors shall take place within a period
of 28 days from the date of the recommendation by the RP.

• The RP is responsible for supervising the execution of the Plan, and
upon successful implementation, notice of the same must be sent to
the Adjudicating Authority. In the event the guarantor fails to
implement the plan, the RP shall issue a notice to the guarantor asking
the guarantor to remedy the same, in the event such remedy is not
accomplished, and the RP may approach the Adjudicating Authority for
directions.

• The RP shall apply to the NCLT for a discharge order in relation to the
debts mentioned in Repayment Plan, on the basis of the Repayment
Plan.

• Further, in the event of failure of the successful implementation of the
plan the creditors so affected have the right to initiate bankruptcy
proceedings against the guarantor in a similar manner as liquidation
proceedings are initiated against a corporate debtor in the event that a
resolution plan fails. Apart from a Creditor, the Debtor is also entitled
to apply to the NCLT for initiating Bankruptcy process.

• The application can be withdrawn upon receipt of the permission of
withdrawal from the Adjudicating Authority. The Adjudicating Authority
may grant the permission for withdrawal before the application is
admitted, on a request made by the applicant. Withdrawal may be
allowed after the admission of the application if 90% of the creditors
agree to such withdrawal.

The Insolvency and Bankruptcy of personal guarantors in the Code can be
seen as a welcoming change as it will affect the strength of the cre ditors'

6
Highlights related to Insolvency and Bankruptcy Process for PG to CD under IBC

efforts in resolution and the creditors can achieve an effective resolution for
debt that is owed by a corporate debtor as well as its personal guarantors
thereby avoiding legal proceedings in multiple tribunals. It also helps the
personal guarantors to settle with the Creditor(s) through legal process and
get discharged from the Creditors with respect to their liabilities under
Guarantee(s).

CHAPTER I of PART III of IBC deals with important definitions related to

Section 79(2) “associate” of the debtor means –
(a) a person who belongs to the immediate family of the debtor; 66

(b) a person who is a relative of the debtor or a relative of the spouse of
the debtor;

(c) a person who is in partnership with the debtor;

(d) a person who is a spouse or a relative of any person with whom the
debtor is in partnership;

(e) a person who is employer of the debtor or employee of the debtor;

(f) a person who is a trustee of a trust in which the beneficiaries of the
trust include a debtor, or the terms of the trust confer a power on the
trustee which may be exercised for the benefit of the debtor; and

(g) a company, where the debtor or the debtor along with his associates,
own more than fifty per cent. of the share capital of the company or
control the appointment of the board of directors of the company.

Explanation. - For the purposes of this sub-section, “relative”, with reference
to any person, means anyone who is related to another, if-
(i) they are members of a Hindu Undivided Family;

(ii) one person is related to the other in such manner as may be
prescribed;

Section 79(3) “bankrupt” means –

(a) a debtor who has been adjudged as bankrupt by a bankruptcy order
under section 126;

(b) each of the partners of a firm, where a bankruptcy order under section
126 has been made against a firm; or

7
HB on Personal Guarantors to Corporate Debtors under IBC, 2016

(c) any person adjudged as an undischarged insolvent;
Section 79(4) “bankruptcy” means the state of being bankrupt;
Section 79 (5) “bankruptcy debt”, in relation to a bankrupt, means –
(a) any debt owed by him as on the bankruptcy commencement date;
(b) any debt for which he may become liable after bankruptcy

commencement date but before his discharge by reason of any
transaction entered into before the bankruptcy commencement date;
and
(c) any interest which is a part of the debt under section 171;
Section 79 (6) “bankruptcy commencement date” means the date on which a
bankruptcy order is passed by the Adjudicating Authority under section 126;
Section 79 (7) “bankruptcy order” means an order passed by an Adjudicating
Authority under section 126;
Section 79 (8) “bankruptcy process” means a process against a debtor under
Chapters IV and V of this part;
Section 79 (9) “bankruptcy trustee” means the insolvency professional
appointed as a trustee for the estate of the bankrupt under section 125;
Section 79 (11) “committee of creditors” means a committee constituted
under section 134;
Section 79 (12) “debtor” includes a judgment-debtor;
Section 79 (13) “discharge order” means an order passed by the Adjudicating
Authority discharging the debtor under sections 92, 119 and section 138, as
the case may be;
Section 79 (14) “excluded assets” for the purposes of this part includes –
(a) unencumbered tools, books, vehicles and other equipment as are
necessary to the debtor or bankrupt for his personal use or for the
purpose of his employment, business or vocation,
(b) unencumbered furniture, household equipment and provisions as are
necessary for satisfying the basic domestic needs of the bankrupt and
his immediate family;

8
Highlights related to Insolvency and Bankruptcy Process for PG to CD under IBC

(c) any unencumbered personal ornaments of such value, as may be
prescribed, of the debtor or his immediate family which cannot be
parted with, in accordance with religious usage;

(d) any unencumbered life insurance policy or pension plan taken in the
name of debtor or his immediate family; and

(e) an unencumbered single dwelling unit owned by the debtor of such
value as may be prescribed;

Section 79 (15) “excluded debt” means –
(a) liability to pay fine imposed by a court or tribunal;
(b) liability to pay damages for negligence, nuisance or breach of a

statutory, contractual or other legal obligation;
(c) liability to pay maintenance to any person under any law for the time

being in force;
(d) liability in relation to a student loan;
(e) any other debt as may be prescribed;
Section 79 (16) “firm” means a body of individuals carrying on business in
partnership whether or not registered under section 59 of the Partnership
Act, 1932 (9 of 1932);
Section 79 (17) “immediate family” of the debtor means his spouse,
dependent children and dependent parents;
Section 79(18) “partnership debt” means a debt for which all the partners in a
firm are jointly liable;
Section 79 (19) “qualifying debt” means amount due, which includes interest
or any other sum due in respect of the amounts owed under any contract, by
the debtor for a liquidated sum either immediately or at certain future time
and does not include –
(a) an excluded debt;
(b) a debt to the extent it is secured; and
(c) any debt which has been incurred three months prior to the date of the

application for fresh start process;

9
HB on Personal Guarantors to Corporate Debtors under IBC, 2016

Section 79 (20) “repayment plan” means a plan prepared by the debtor in
consultation with the resolution professional under section 105 containin g a
proposal to the committee of creditors for restructuring of his debts or affairs;
Section 79 (21) “resolution professional” means an insolvency professional
appointed under this part as a resolution professional for conducting the
fresh start process or insolvency resolution process;
Section 79 (22) “undischarged bankrupt” means a bankrupt who has not
received a discharge order under section 138.

10
Chapter 3

Provisions with respect to Insolvency
Resolution Process for Personal
Guarantors to Corporate Debtors
under IBC

Chapter III of PART III of the Code covering Section 94-120, deals with the
insolvency resolution process for Individuals and Partnership firms, currently
applicable to personal guarantor to corporate debtor.

The Resolution Process Report on Submission of repayment
Repayment Plan plan by RP to AA
Application for
In solvency

RP Appointment Repayment Plan 14 -21 days
10 days Meeting of Creditors
21 days
RP's Report Report on the
14 days Creditor list by meeting by RP
RP
Order by AA
30 Days

Order by AA Creditors'
Claims

Admission 21 days

Yes
Public Notice

NO 7 days Approved?
Intention to defraud

Creditor Yes No
entitled to file
for bankruptcy

Binding on Both debtor and
creditor and creditor entitled
debtor as if
proposed by to file for
bankruptcy
debtor
HB on Personal Guarantors to Corporate Debtors under IBC, 2016

Initiation of the Insolvency Resolution Process:

The Insolvency Resolution Process for individuals and partnership firms, can
be initiated by a creditor or debtor himself.

Table showing summary of application by Debtor/ Creditor.

Debtor (S.94) Creditor (S.95)

➢ In Form A ➢ Demand notice in Form B

➢ Application in Form C

➢ Committed default (qualifying ➢ Guarantee is invoked

debt) ➢ Individually or jointly with other

creditors

➢ Personally, or through a ➢ Directly or through a Resolution

Resolution Professional Professional

➢ Only if debtors fail to pay within

14 days of service of demand

notice (in Form B).

Form A, B and C has been prescribed as per The IBBI (Application to

Adjudicating Authority for Insolvency Resolution Process for Personal

Guarantors to Corporate Debtors) Rules, 2019. Formats of same has been

depicted in Annexure.

Application by debtor (Section 94):

A debtor who commits a default may apply, either personally or through a
resolution professional, to the Adjudicating Authority for initiating the
insolvency resolution process, by submitting an application in such form and
manner and accompanied with such fee as may be prescribed. An
application shall be submitted only in respect of debts which are not
excluded debts. A debtor shall not be entitled to make an application if he is

a) Undischarged bankrupt;

b) Undergoing a fresh start process;

c) Undergoing an insolvency resolution process; or

d) Undergoing a bankruptcy process. Or

e) If an application under this Chapter has been admitted in respect of
the debtor during the period of twelve months preceding the date of
submission of the application under this section.

12
Provisions w.r.to Insolvency Resolution Process for PG to CD under IBC

Application by creditor (Section 95):

A creditor may apply either by himself, or jointly with other creditors, or
through a resolution professional to the Adjudicating Authority for initiating an
insolvency resolution process under this section by submitting an application
in such form and manner and accompanied by such fee as may be
prescribed.

A creditor may apply in relation to any partnership debt owed to him for
initiating an insolvency resolution process against-

(a) any one or more partners of the firm; or

(b) the firm.

Where an application has been made against one partner in a firm, any other
application against another partner in the same firm shall be presented in or
transferred to the Adjudicating Authority in which the first mentioned
application is pending for adjudication and such Adjudicating Authority may
give such directions for consolidating the proceedings under the applications
as it thinks just.

An application shall be accompanied with details and documents relating to-

a) the debts owed by the debtor to the creditor or creditors submitting the
application for insolvency resolution process as on the date of
application;

b) the failure by the debtor to pay the debt within a period of fourteen
days of the service of the notice of demand; and

c) Relevant evidence of such default or non-repayment of debt.

Interim- moratorium (Section 96)

When an application is filed under section 94 or section 95 –

a) an interim-moratorium shall commence on the date of the application in
relation to all the debts and shall cease to have effect on the date of
admission of such application; and

b) during the interim-moratorium period -
▪ any pending legal action or proceeding in respect of any debt
shall be deemed to have been stayed; and

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HB on Personal Guarantors to Corporate Debtors under IBC, 2016

▪ the creditors of the debtor shall not initiate any legal action or
proceedings in respect of any debt.

Where the application has been made in relation to a firm, the interim-
moratorium under sub-section (1) shall operate against all the partners of the
firm as on the date of the application. The provisions of this section shall not
apply to such transactions as may be notified by the Central Government in
consultation with any financial sector regulator.

Appointment of resolution professional (Section 97)

If the application under section 94 or 95 is filed through a resolution
professional, the Adjudicating Authority shall direct the Board within seven
days of the date of the application to confirm that there are no disciplinary
proceedings pending against resolution professional.

The Board shall within seven days of receipt of directions communicate to
the Adjudicating Authority in writing either confirming the appointment of the
resolution professional; or rejecting the appointment of the resolution
professional and nominating another resolution professional for the
insolvency resolution process.

If the application is filed not through the resolution professional, the
Adjudicating Authority shall direct the Board, within seven days of the filing of
such application, to nominate a resolution professional for the insolvency
resolution process. The Board shall nominate a resolution professional within
ten days of receiving the direction issued by the Adjudicating Authority. The
Adjudicating Authority shall by order appoint the resolution professional
recommended or nominated by the Board.

Replacement of resolution professional (Section 98)

Where the debtor or the creditor is of the opinion that the resolution
professional appointed under section 97 is required to be replaced, he may
apply to the Adjudicating Authority for the replacement of such resolution
professional.

The Adjudicating Authority shall, within seven days of the receipt of the
application make a reference to the Board for replacement of the resolution
professional. The Board shall, within ten days of the receipt of a reference
from the Adjudicating Authority, recommend the name of the resolution
professional to the Adjudicating Authority against whom no disciplinary
proceedings are pending.

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Provisions w.r.to Insolvency Resolution Process for PG to CD under IBC

The creditors may apply to the Adjudicating Authority for replacement of the
resolution professional where it has been decided in the meeting of the
creditors, to replace the resolution professional with a new resolution
professional for implementation of the repayment plan. On the basis of the
communication of the Board, the Adjudicating Authority shall pass an order
appointing a new resolution professional.

The Adjudicating Authority may give directions to the resolution professional
replaced to share all information with the new resolution professional in
respect of the insolvency resolution process and to co-operate with the new
resolution professional in such matters as may be required.

Submission of report by resolution professional (Section
99)

The resolution professional shall examine the application referred to in
section 94 or section 95, as the case may be, within ten days of his
appointment, and submit a report to the Adjudicating Authority
recommending for approval or rejection of the application.

Where the application has been filed under section 95, the resolution
professional may require the debtor to prove repayment of the debt claimed
as unpaid by the creditor by furnishing –

a) evidence of electronic transfer of the unpaid amount from the bank
account of the debtor;

b) evidence of encashment of a cheque issued by the debtor; or

c) A signed acknowledgment by the creditor accepting receipt of dues.

Where the debt for which an application has been filed by a creditor is
registered with the information utility, the debtor shall not be entitled to
dispute the validity of such debt. For the purposes of examining an
application, the resolution professional may seek such further information or
explanation in connection with the application as may be required from the
debtor or the creditor or any other person who, in the opinion of the
resolution professional, may provide such information. The information or
explanation to be furnished, within seven days of receipt of the request.

The RP will examine the application whether it satisfies the requirements set
out in section 94 or 95; the applicant has provided information and given
explanation sought by the resolution professional. The resolution
professional shall record the reasons for recommending the acceptance or

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HB on Personal Guarantors to Corporate Debtors under IBC, 2016

rejection of the application. The resolution professional shall give a copy of
the report to the debtor or the creditor, as the case may be.

Where the Resolution Professional finds that the debtor is eligible for a Fresh
Start, he shall submit a Report recommending that the application by the
Debtor be treated as an application under Section 81 by the Adjudicating
Authority.

Admission or rejection of application (Section 100)

The Adjudicating Authority shall, within fourteen days from the date of
submission of the report under section 99 pass an order either admitting or
rejecting the application referred to in section 94 or 95. Where the
Adjudicating Authority admits an application, it may, on the request of the
resolution professional, issue instructions for the purpose of conducting
negotiations between the debtor and creditors and for arriving at a repayment
plan.

The Adjudicating Authority shall provide a copy of the order, along with the
report of the resolution professional and the application referred to in section
94 or 95, to the creditors within seven days from the date of the said order.

If the application, is rejected by the Adjudicating Authority on the basis of
report submitted by the resolution professional or that the application was
made with the intention to defraud his creditors or the resolution professional,
the order shall record that the creditor is entitled to file for a bankruptcy order
under Chapter IV.

Withdrawal of Application

As per Rule 11 of The IBBI (Application to Adjudicating Authority for
Insolvency Resolution Process for Personal Guarantors to Corporate
Debtors) Rules, 2019, Withdrawal of application may be permitted:

a) before its admission, on a request made by the applicant;

b) after its admission, on the request made by the applicant, if ninety
percent of the creditors agree to such withdrawal. Application under
this rule shall be in Form D.

Moratorium (Section 101)

When the application is admitted under section 100, a moratorium shall
commence in relation to all the debts and shall cease to have effect at the

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Provisions w.r.to Insolvency Resolution Process for PG to CD under IBC

end of the period of one hundred and eighty days beginning with the date of
admission of the application or on the date the Adjudicating Authority passes
an order on the repayment plan under section 114, whichever is earlier.
During the moratorium period-
a) any pending legal action or proceeding in respect of any debt shall be

deemed to have been stayed;
b) the creditors shall not initiate any legal action or legal proceedings in

respect of any debt; and
c) the debtor shall not transfer, alienate, encumber or dispose of any of the

assets or his legal right or beneficial interest therein;
Where an order admitting the application under section 96 has been made in
relation to a firm, the moratorium shall operate against all the partners of the
firm.

Public notice and claims from creditors (Section 102)

The Adjudicating Authority shall issue a public notice within seven days of
passing the order under section 100 inviting claims from all creditors within
twenty- one days of such issue.
The notice shall include–
a) details of the order admitting the application;
b) particulars of the resolution professional with whom the claims are to be

registered; and
c) the last date for submission of claims.
The notice shall be -
a) published in at least one English and one vernacular newspaper which is

in circulation in the state where the debtor resides;
b) affixed in the premises of the Adjudicating Authority; and
c) placed on the website of the Adjudicating Authority.

Registering of claims by creditors (Section 103)

The creditors shall register claims with the resolution professional by sending
details of the claims by way of electronic communications or through courier,

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HB on Personal Guarantors to Corporate Debtors under IBC, 2016

speed post or registered letter. Along with claim, the creditor shall provide to
the resolution professional, personal information and such particulars as may
be prescribed. Regulation 7 of the IBBI (Insolvency Resolution Process for
Personal Guarantors to Corporate Debtors) Regulations, 2019, prescribes as
follows:

1) A creditor shall submit its claim along with proof to the resolution
professional in Form B, on or before the last date mentioned in the public
notice issued of section 102.

2) The creditor shall bear the costs relating to submission of the claim,
including proof, under these regulations.

Preparation of list of creditors (Section 104)

The resolution professional shall prepare a list of creditors on the basis of -

a) the information disclosed in the application filed by the debtor under
section 94 or 95, as the case may be;

b) claims received by the resolution professional under section 102.

The resolution professional shall prepare the list within thirty days from the
date of the notice.

The list shall contain the names of creditors, amount claimed, amount admitted
and security interest, if any, in respect of such claims. The resolution
professional shall make the list of creditors available for inspection by persons
submitting claims, serve a copy of the list to the guarantor, make available the list
on the website, present the list in the meeting and file a certified copy of the list
with the Adjudicating Authority along with the repayment plan. (as per
regulations).

Repayment plan (Section 105)

The debtor shall prepare, in consultation with the resolution professional, a
repayment plan containing a proposal to the creditors for restructuring of his
debts or affairs.

The repayment plan may authorize or require the resolution professional to

a) carry on the debtor's business or trade on his behalf or in his name; or

b) realise the assets of the debtor; or

c) Administer or dispose of any funds of the debtor.

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Provisions w.r.to Insolvency Resolution Process for PG to CD under IBC

The repayment plan shall include the following, namely: -

a) justification for preparation of such repayment plan and reasons on the
basis of which the creditors may agree upon the plan;

b) provision for payment of fee to the resolution professional;

c) Such other matters as may be specified.

Regulation 17 of the IBBI (Insolvency Resolution Process for Personal
Guarantors to Corporate Debtors) Regulations, 2019, provides the Contents of
repayment plan as follows:

1) The repayment plan shall provide the following -

(a) the term of the repayment plan and its implementation schedule,
including the amounts to be repaid and dates of repayment to
creditors;

(b) the source of funds that will be used to pay resolution process
costs and that such payment shall be made in priority over any
creditor;

(c) a minimum budget for the duration of the repayment plan, to cover
the reasonable expenses of the guarantor and members of his
immediate family to the extent they are dependent on him, provided
that at least ten percent of the realisable income of the guarantor
shall be utilised for repayment of debts;

(d) financing required for implementation of the repayment plan;

(e) if the guarantor has any business, the manner in which it is
proposed to be conducted during the course of the repayment plan,
and the role of the resolution professional;

(f) the manner in which funds held for the purposes of the repayment
plan, invested or otherwise dealt with, pending repayment to
creditors;

(g) the functions which are to be undertaken by the resolution
professional, including supervision and implementation of the
repayment plan;

(h) variation of onerous terms of a contract or transaction involving the
guarantor;

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HB on Personal Guarantors to Corporate Debtors under IBC, 2016

(i) the details of excluded assets and excluded debts of the guarantor;
and

(j) terms and conditions for the discharge of the guarantor.
2) The repayment plan may provide for the following-

(a) transfer or sale of all or part of the assets of the guarantor along
with the mode and manner of such sale;

(b) administration or disposal of any funds of the guarantor;
(c) satisfaction or modification of any security interest;
(d) reduction in the amount payable to creditors;
(e) curing or waiving of any breach of a debt due from the guarantor;
(f) modification in the terms of repayment of any debt due from the

guarantor;
(g) part of the income of the guarantor to be used for the repayment of

the debt, and the manner of calculating the income of the
guarantor;
(h) the manner in which funds held for the purpose of repayment to
creditors, and not so repaid at the end of the repayment plan, are
to be dealt with; and
(i) such other matters as may be required by the creditors.

Report of resolution professional on repayment plan
(Section 106)

The resolution professional shall submit the repayment plan under section
105 along with his report on such plan to the Adjudicating Authority within a
period of twenty-one days from the last date of submission of claims under
section 102.
The report shall include that-
(a) the repayment plan is in compliance with the provisions of any law for the

time being in force;
(b) the repayment plan has a reasonable prospect of being approved and

implemented; and

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Provisions w.r.to Insolvency Resolution Process for PG to CD under IBC

(c) there is a necessity of summoning a meeting of the creditors, if required,
to consider the repayment plan:

Provided that where the resolution professional recommends that a meeting
of the creditors is not required to be summoned, reasons for the same shall
be provided.

The report shall also specify the date on which, and the time and place at
which, the meeting should be held if he is of the opinion that a meeting of the
creditors should be summoned. The date on which the meeting is to be held
shall be not less than fourteen days and not more than twenty-eight days
from the date of submission of report. The resolution professional shall
consider the convenience of creditors in fixing the date and venue of the
meeting of the creditors.

Summoning of meeting of creditors (Section 107)

The resolution professional shall issue a notice calling the meeting of the
creditors at least fourteen days before the date fixed for such meeting and
the notice of the meeting to be sent to the list of creditors prepared. The
notice shall state the address of the Adjudicating Authority to which the
repayment plan and report of the resolution professional on the repayment
plan has been submitted and shall be accompanied by -

(a) a copy of the repayment plan;

(b) a copy of the statement of affairs of the debtor;

(c) a copy of the said report of the resolution professional; and

(d) forms for proxy voting. The proxy voting, including electronic proxy voting
shall take place in such manner and form as may be specified.

Conduct of meeting of creditors (Section 108)

1) The meeting of the creditors shall be conducted in accordance with the
provisions of this section and sections 109,110 and 111.

2) In the meeting of the creditors, the creditors may decide to approve,
modify or reject the repayment plan.

3) The resolution professional shall ensure that if modifications are
suggested by the creditors, consent of the debtor shall be obtained for
each modification.

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HB on Personal Guarantors to Corporate Debtors under IBC, 2016

4) The resolution professional may for a sufficient cause adjourn the meeting
of the creditors for a period of not more than seven days at a time.

Voting rights in meeting of creditors (Section 109)

A creditor shall be entitled to vote at every meeting of the creditors in respect
of the repayment plan in accordance with voting share assigned to him. The
resolution professional shall determine voting share to be assigned to each
creditor in the manners specified by the Board.

A creditor shall not be entitled to vote in respect of a debt for an unliquidated
amount. A creditor shall not be entitled to vote in a meeting of the creditors if
he is not a creditor mentioned in the list of creditors under section 104 or is
an associate of the debtor.

Rights of secured creditors in relation to repayment plan
(Section 110)

1) Secured creditors shall be entitled to participate and vote in the meetings
of the creditors.

2) A secured creditor participating in the meetings of the creditors and voting
in relation to the repayment plan shall forfeit his right to enforce the
security during the period of the repayment plan in accordance with the
terms of the repayment plan.

3) Where a secured creditor does not forfeit his right to enforce security, he
shall submit an affidavit to the resolution professional at the meeting of the
creditors stating -

(a) that the right to vote exercised by the secured creditor is only in
respect of the unsecured part of the debt; and

(b) the estimated value of the unsecured part of the debt.

4) In case a secured creditor participates in the voting on the repayment plan
by submitting an affidavit, the secured and unsecured parts of the debt
shall be treated as separate debts.

5) The concurrence of the secured creditor shall be obtained if he does not
participate in the voting on repayment plan but provision of the repayment
plan affects his right to enforce security.

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Provisions w.r.to Insolvency Resolution Process for PG to CD under IBC

For the purposes of this section, "period of the repayment plan" means the
period from the date of the order passed under section 114 till the date o n
which the notice is given by the resolution professional under section 117 or
report submitted by the resolution professional under section 118, as the
case may be.

Approval of repayment plan by creditors (Section 111)

The repayment plan or any modification to the repayment plan shall be
approved by a majority of more than three-fourth in value of the creditors
present in person or by proxy and voting on the resolution in a meeting of the
creditors.

Report of meeting of creditors on repayment plan
(Section 112)

The resolution professional shall prepare a report of the meeting of the
creditors on repayment plan. The report shall contain -

(a) whether the repayment plan was approved or rejected and if approved,
the list the modifications, if any;

(b) the resolutions which were proposed at the meeting and the decision
on such resolutions;

(c) list of the creditors who were present or represented at the meeting, and
the voting records of each creditor for all meetings of the creditors; and

(d) such other information as the resolution professional thinks appropriate to
make known to the Adjudicating Authority.

Notice of decisions taken at meeting of creditors
(Section 113)

The resolution professional shall provide a copy of the report of the meeting
of creditors to -the debtor, the creditors, including those who were not
present at the meeting; and the Adjudicating Authority.

Regulation 19 of the IBBI (Insolvency Resolution Process for Personal
Guarantors to Corporate Debtors) Regulations, 2019, Filing with the
Adjudicating Authority.

The resolution professional shall file the repayment plan, as approved by the
creditors, along with the report mentioned in sections 106 or 112, as the case

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HB on Personal Guarantors to Corporate Debtors under IBC, 2016

may be, with the Adjudicating Authority on or before completion of
one hundred and twenty days from the resolution process commencement date.

The resolution professional shall provide the copies of the documents filed
with the Adjudicating Authority to the guarantor and the creditors, within three
days from the date of such filing.

Order of Adjudicating Authority on repayment plan
(Section 114)

The Adjudicating Authority shall by an order approve or reject the repayment
plan on the basis of the report of the meeting of the creditors submitted by
the resolution professional. Provided that where a meeting of creditors is not
summoned, the Adjudicating Authority shall pass an order on the basis of the
report prepared by the resolution professional under section 106. The order
of the Adjudicating Authority approving the repayment plan may also provide
for directions for implementing the repayment plan. Where the Adjudicating
Authority is of the opinion that the repayment plan requires modification, it
may direct the resolution professional to re-convene a meeting of the
creditors for reconsidering the repayment plan.

Effect of order of Adjudicating Authority on repayment
plan (Section 115)

Where the Adjudicating Authority has approved the repayment plan, the
repayment plan shall take effect as if proposed by the debtor in the meeting;
and be binding on creditors mentioned in the repayment plan and the debtor.

Where the Adjudicating Authority rejects the repayment plan under section
114, the debtor and the creditors shall be entitled to file an application for
bankruptcy under Chapter IV.

A copy of the order passed by the Adjudicating Authority shall be provided to
the Board, for the purpose of recording an entry in the register referred to in
section 196.

Implementation and supervision of repayment plan
(Section 116)

The resolution professional shall supervise the implementation of the
repayment plan.

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Provisions w.r.to Insolvency Resolution Process for PG to CD under IBC

The resolution professional may apply to the Adjudicating Authority for
directions, if necessary, in relation to any particular matter arising under the
repayment plan. The Adjudicating Authority may issue directions to the
resolution professional on that basis.

Completion of repayment plan (Section 117)

The resolution professional shall within fourteen days of the completion of
the repayment plan, forward to the persons who are bound by the repayment
plan and the Adjudicating Authority, a notice that the repayment plan has
been fully implemented; and a copy of a report by the resolution professional
summarising all receipts and payments made in pursuance of the repayment
plan and extent of the implementation of such plan as compared with the
repayment plan approved by the meeting of the creditors.

The resolution professional may apply to the Adjudicating Authority to extend
the time for such further period not exceeding seven days.

Regulation 20 of the IBBI (Insolvency Resolution Process for Personal
Guarantors to Corporate Debtors) Regulations, 2019, Breach of repayment
plan by the guarantor.

1) If in the opinion of the resolution professional, the guarantor has failed in
implementation of the repayment plan, the resolution professional shall,
within three days of knowledge of such failure, issue a notice to the
guarantor identifying the failure and requiring him, within fifteen days of
receipt of the notice, to-

(a) address such failure if it can be addressed, or

(b) provide an explanation for the failure.

2) If the guarantor, within the period specified under sub-regulation (1), -

(a) addresses the failure in implementation of the repayment plan; or

(b) provides a satisfactory explanation for such failure,

the resolution professional shall report the failure to creditors within
seven days of the date of failure addressed or explanation provided for
such failure.

3) In cases not covered under sub-regulation (2), the resolution
professional may apply to the Adjudicating Authority under sub-section
(2) of section 116 for directions, if he is of the opinion that the failure

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HB on Personal Guarantors to Corporate Debtors under IBC, 2016

will affect the implementation of the repayment plan.

Repayment plan coming to end prematurely (Section
118)

A repayment plan shall be deemed to have come to an end prematurely if it
has not been fully implemented in respect of all persons bound by it within
the period as mentioned in the repayment plan. Where a repayment plan
comes to an end prematurely under this section, the resolution professional
shall submit a report to the Adjudicating Authority which shall state:
(a) the receipts and payments made in pursuance of the repayment plan;
(b) the reasons for premature end of the repayment plan; and

(c) the details of the creditors whose claims have not been fully satisfied.

The Adjudicating Authority shall pass an order on the basis of the report
submitted by the resolution professional that the repayment plan has not
been completely implemented.

The debtor or the creditor, whose claims under repayment plan have not
been fully satisfied, shall be entitled to apply for a bankruptcy order under
Chapter IV.

The Adjudicating Authority shall forward to the persons bound by the
repayment plan under section 115, a copy of the report submitted by the
resolution professional to the Adjudicating Authority and order passed by the
Adjudicating Authority.

The Adjudicating Authority shall forward a copy of the order passed to the
Board, for the purpose of recording entries in the register referred to in
section 196.

Discharge order (Section 119)

On the basis of the repayment plan, the resolution professional shall apply to
the Adjudicating Authority for a discharge order in relation to the debts
mentioned in the repayment plan and the Adjudicating Authority may pass
such discharge order.
The repayment plan may provide for -

(a) early discharge; or
(b) discharge on complete implementation of the repayment plan.

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Provisions w.r.to Insolvency Resolution Process for PG to CD under IBC

The discharge order shall be forwarded to the Board, for the purpose of
recording entries in the register referred to in section 196. The discharge
order shall not discharge any other person from any liability in respect of his
debt.
Regulation 21 of the IBBI (Insolvency Resolution Process for Personal
Guarantors to Corporate Debtors) Regulations, 2019, Application for discharge
order.
1) The resolution professional shall, for the purpose of discharge order, file

an application along with copies of the notice and report under section 117
to the Adjudicating Authority under section 119.
2) On consideration of the notice and the report of section 117, the
Adjudicating Authority may pass the discharge order.
Regulation 22 of the IBBI (Insolvency Resolution Process for Personal
Guarantors to Corporate Debtors) Regulations, 2019, Non-cooperation by
guarantor.
In the event of non-cooperation of the guarantor at any time during the resolution
process period or during the implementation of the repayment plan, the
resolution professional shall prepare a statement to this effect and file the same
with the Adjudicating Authority for appropriate directions

27
Chapter 4

Provisions with respect to eligibility of
RP for appointment and role of RP in
Insolvency Resolution Process for
Personal Guarantors to Corporate
Debtors under IBC

Regulation 4 of the IBBI (Insolvency Resolution Process for Personal
Guarantors to Corporate Debtors) Regulations, 2019, Eligibility of resolution
professional:

1) An insolvency professional shall be eligible to be appointed as a resolution
professional for a resolution process, if-

(a) he, the insolvency professional entity of which he is a partner or a
director, and all the partners and directors of the said insolvency
professional entity are independent of the guarantor;

(b) he is not subject to any ongoing disciplinary proceeding or a
restraint order of the Board or of the insolvency professional
agency of which he is a professional member; and

(c) the insolvency professional entity of which he is a partner or a
director, or any other partner or director of such insolvency
professional entity does not represent any party in the resolution
process.

Explanation.- For the purposes of this sub-regulation, -

(1) a person shall be considered independent of the guarantor, if he-

(a) is not an associate of the guarantor;

(b) is not a related party of the corporate debtor; and

(c) has not acted or is not acting as interim resolution
professional, resolution professional or liquidator in respect
of the corporate debtor;

(2) the expression “related party” shall have the meaning assigned to it
in sub-section (24) of section 5.
Provisions w.r.t. eligibility of RP for appointment and role of RP

2) An insolvency professional, other than who has filed an application under
section 94 or 95 on behalf of a guarantor or a creditor, as the case may
be, shall provide a written consent in Form A to the Adjudicating Authority
before his appointment as resolution professional in a resolution process.

Standard of conduct (Section 120)

The resolution professional shall perform his functions and duties in
compliance with the code of conduct provided under section 208. Sub section
(2) of section 208 provides that
Every insolvency professional shall abide by the following code of conduct: –
(a) to take reasonable care and diligence while performing his duties;
(b) to comply with all requirements and terms and conditions specified in

the byelaws of the insolvency professional agency of which he is a
member;
(c) to allow the insolvency professional agency to inspect his records;
(d) to submit a copy of the records of every proceeding before the
Adjudicating Authority to the Board as well as to the insolvency
professional agency of which he is a member; and
(e) to perform his functions in such manner and subject to such conditions
as may be specified.

Code of Conduct For Insolvency Professionals as per
IBBI (Insolvency Professionals) Regulations 2016
includes the following principles:

• Integrity and objectivity
• Independence and impartiality
• Professional competence
• Representation of correct facts and correcting misapprehensions
• Timeliness
• Information management
• Confidentiality
• Occupation, employability and restrictions
• Remuneration and costs
• Gifts and hospitality

29
Chapter 5

Provisions with respect to Bankruptcy
Process for Personal Guarantors to
Corporate Debtors under IBC

Chapter IV of PART III of the Code covering Section 121 to 148, deals with
the bankruptcy process for individuals and partnership firms, currently
applicable to personal guarantor to corporate debtor.

Grounds on which Application for bankruptcy could be filed:

Application for Bankruptcy (Section 121)

An application for bankruptcy of a debtor may be made, by a creditor
individually or jointly with other creditors or by a debtor, to the Adjudicating
Authority in the following circumstances, namely;

(a) where an order has been passed by an Adjudicating Authority under sub-
section 4 of section 100; or

(b) where an order has been passed by an Adjudicating Authority under sub-
section 2 of section 115; or

(c) Where an order has been passed by an Adjudicating Authority under sub-
section 3 of section 118.

An application for bankruptcy shall be filed within a period of three months of
the date of the order passed by the Adjudicating Authority. Where the debtor
is a firm, the application may be filed by any of its partners.
Provisions w.r.t. Bankruptcy Process for PG to CD under IBC

Bankruptcy Process

Application for bankruptcy 21 days from BCD
by debtor/ creditor
Notice of meeting of creditors
Appointment of bankruptcy
trustee Administration and
distribution of the estate of
14 days bankrupt

Bankruptcy Order by AA Report of Bankruptcy
10 days of BCD trustee for administration
and distribution
Public notice by AA
7 days Meeting of creditor
7 days
Claims from Creditors
14 days from BCD

Preparation of list of Approval of trustee’s
Creditors by Bankruptcy report by Creditors
Committee
trustee
7 days

Application to AA for
discharge order

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HB on Personal Guarantors to Corporate Debtors under IBC, 2016

Application by debtor (Section 122)

The application for bankruptcy by the debtor shall be accompanied by -

(a) the records of insolvency resolution process undertaken;

(b) the statement of affairs of the debtor in such form and manner as may be
prescribed, on the date of the application for bankruptcy; and

(c) a copy of the order passed by the Adjudicating Authority permitting the
debtor to apply for bankruptcy.

The debtor may propose an insolvency professional as the bankruptcy
trustee in the application for bankruptcy. The application shall be in such
form and manner and accompanied by such fee as may be prescribed. An
application for bankruptcy by the debtor shall not be withdrawn without the
leave of the Adjudicating Authority.

Application by creditor (Section 123)

The application for bankruptcy by the creditor shall be accompanied by-

(a) the records of insolvency resolution process undertaken.

(b) a copy of the order passed by the Adjudicating Authority permitting the
creditor to apply for bankruptcy;

(c) details of the debts owed by the debtor to the creditor as on the date of
the application for bankruptcy; and

(d) such other information as may be prescribed.

An application made in respect of a debt which is secured, shall be
accompanied with -

(a) a statement by the creditor having the right to enforce the security that he
shall, in the event of a bankruptcy order being made, give up his security
for the benefit of all the creditors of the bankrupt; or

(b) a statement by the creditor stating that the application for bankruptcy is
only in respect of the unsecured part of the debt; and an estimated value
of the unsecured part of the debt.

If a secured creditor makes an application for bankruptcy and submits a
statement as referred, the secured and unsecured parts of the debt shall be
treated as separate debts.

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Provisions w.r.t. Bankruptcy Process for PG to CD under IBC

The creditor may propose an insolvency professional as the bankruptcy
trustee in the application for bankruptcy. An application for bankruptcy in
case of a deceased debtor, may be filed against his legal representatives.
The application shall be in such form and manner and accompanied by such
fee as may be prescribed. It shall not be withdrawn without the permission of
the Adjudicating Authority.

Effect of application (Section 124)

When an application is filed, an interim-moratorium shall commence on the
date of the making of the application on all actions against the properties of
the debtor in respect of his debts and such moratorium shall cease to have
effect on the bankruptcy commencement date. During the interim-moratorium
period -

(i) any pending legal action or legal proceeding against any property of the
debtor in respect of any of his debts shall be deemed to have been
stayed;

(ii) the creditors of the debtor shall not be entitled to initiate any legal action
or legal proceedings against any property of the debtor in respect of any
of his debts.

Where the application has been made in relation to a firm, the interim-
moratorium shall operate against all the partners of the firm as on the date of
the making of the application.

Appointment of insolvency professional as bankruptcy
trustee (Section 125)

If an insolvency professional is proposed as the bankruptcy trustee in the
application for bankruptcy, the Adjudicating Authority shall direct the Board
within seven days of receiving the application for bankruptcy to confirm that
there are no disciplinary proceedings against such professional. The Board
shall within ten days of the receipt of the direction in writing either confirm the
appointment of the proposed insolvency professional as the bankruptcy
trustee for the bankruptcy process or reject the appointment of the proposed
insolvency professional as the bankruptcy trustee and nominate another
bankruptcy trustee for the bankruptcy process.

Where a bankruptcy trustee is not proposed by the debtor or creditor, the
Adjudicating Authority shall direct the Board within seven days of receiving

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the application to nominate a bankruptcy trustee for the bankruptcy process.
The Board shall nominate a bankruptcy trustee within ten days of receiving
the direction of the Adjudicating Authority. The bankruptcy trustee confirmed
or nominated under this section shall be appointed as the bankruptcy trustee
by the Adjudicating Authority in the bankruptcy order.

Bankruptcy order (Section 126)

The Adjudicating Authority shall pass a bankruptcy order within fourteen days
of receiving the confirmation or nomination of the bankruptcy trustee. The
Adjudicating Authority shall provide the following documents to bankrupt,
creditors and the bankruptcy trustee within seven days of the passing of the
bankruptcy order, namely: -

(a) a copy of the application for bankruptcy; and

(b) a copy of the bankruptcy order.

Validity of bankruptcy order (Section 127)

The bankruptcy order passed by the Adjudicating Authority shall continue to
have effect till the debtor is discharged.

Effect of bankruptcy order (Section 128)

On the passing of the bankruptcy order the estate of the bankrupt shall vest
in the bankruptcy trustee. The estate of the bankrupt shall be divided among
his creditors. The bankruptcy order shall not affect the right of any secured
creditor to realize or otherwise deal with his security interest in the same
manner as he would have been entitled if the bankruptcy order had not been
passed. Provided that no secured creditor shall be entitled to any interest in
respect of his debt after the bankruptcy commencement date if he does not
take any action to realise his security within thirty days from the said date. A
creditor of the bankrupt indebted in respect of any debt claimed as a
bankruptcy debt shall not–

(i) initiate any action against the property of the bankrupt in respect of such
debt; or

(ii) commence any suit or other legal proceedings except with the leave of the
Adjudicating Authority and on such terms as the Adjudicating Authority
may impose.

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Provisions w.r.t. Bankruptcy Process for PG to CD under IBC

Where a bankruptcy order has been passed against a firm, the order shall
operate as if it were a bankruptcy order made against each of the individuals
who, on the date of the order, is a partner in the firm.

Statement of financial position (Section 129)

Where a bankruptcy order is passed on the application for bankruptcy by a
creditor, the bankrupt shall submit his statement of financial position to the
bankruptcy trustee within seven days from the bankruptcy commencement
date. The statement of financial position shall be submitted in such form and
manner as may be prescribed.

Where the bankrupt is a firm, its partners on the date of the order shall
submit a joint statement of financial position of the firm, and each partner of
the firm shall submit a statement of his financial position. The bankruptcy
trustee may require the bankrupt or any other person to submit in writing
further information explaining or modifying any matter contained in the
statement of financial position.

Public notice inviting claims from creditors (Section 130)

The Adjudicating Authority shall send notices within ten days of the
bankruptcy commencement date, to the creditors mentioned in the statement
of affairs submitted by the bankrupt or the application for bankruptcy
submitted by the bankrupt.

AA shall issue a public notice inviting claims from creditors.

The public notice shall include the last date up to which the claims shall be
submitted and such others matters and details as may be prescribed and
shall be -

(a) published in leading newspapers, one in English and another in
vernacular having sufficient circulation where the bankrupt resides;

(b) affixed on the premises of the Adjudicating Authority; and

(c) placed on the website of the Adjudicating Authority.

Registration of claims (Section 131)

The creditors shall register claims with the bankruptcy trustee within seven
days of the publication of the public notice, by sending details of the claims
to the bankruptcy trustee in such manner and such other information as may
be prescribed.

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Preparation of list of creditors (Section 132)

The bankruptcy trustee shall, within fourteen days from the bankruptcy
commencement date, prepare a list of creditors of the bankrupt on the basis
of the information disclosed by the bankrupt in the application for bankruptcy
filed by the bankrupt and the statement of affairs filed and claims received by
the bankruptcy trustee.

Summoning of meeting of creditors (Section 133)

The bankruptcy trustee shall, within twenty-one days from the bankruptcy
commencement date, issue a notice for calling a meeting of the creditors, to
every creditor of the bankrupt as mentioned in the list prepared. The notices
issued under shall - state the date of the meeting of the creditors, which shall
not be later than twenty-one days from the bankruptcy commencement date.
Notices to be accompanied with forms of proxy voting specifying the form
and manner in which the proxy voting may take place.

Conduct of meeting of creditors (Section 134)

The bankruptcy trustee shall be the convener of the meeting of the creditors.
He shall decide the quorum for the meeting of the creditors, and conduct the
meeting only if the quorum is present.

The following business shall be conducted in the meeting of the creditors in
which regard a resolution may be passed, namely: –

(a) the establishment of a committee of creditors;

(b) any other business that the bankruptcy trustee thinks fit to be transacted.

The bankruptcy trustee shall cause the minutes of the meeting of the
creditors to be recorded, signed and retained as a part of the records of the
bankruptcy process. The bankruptcy trustee shall not adjourn the meeting of
the creditors for any purpose for more than seven days at a time.

Voting rights of creditors (Section 135)

Every creditor mentioned in the list or his proxy shall be entitled to vote in
respect of the resolutions in the meeting of the creditors in accordance with
the voting share assigned to him. The resolution professional shall determine
the voting share to be assigned to each creditor in the manner specified by
the Board.

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Provisions w.r.t. Bankruptcy Process for PG to CD under IBC

A creditor shall not be entitled to vote in respect of a debt for an unliquidated
amount.

The following creditors shall not be entitled to vote under this section,
namely: –

(a) creditors who are not mentioned in the list of creditors under section 132
and those who have not been given a notice by the bankruptcy trustee;

(b) creditors who are associates of the bankrupt.

Administration and distribution of estate of bankrupt
(Section 136)

The bankruptcy trustee shall conduct the administration and distribution of
the estate of the bankrupt in accordance with the provisions of Chapter V.

Completion of administration (Section 137)

The bankruptcy trustee shall convene a meeting of the committee of creditors
on completion of the administration and distribution of the estate of the
bankrupt. The bankruptcy trustee shall provide the committee of creditors
with a report of the administration of the estate of the bankrupt in the meeting
of the said committee. The committee of creditors shall approve the report
submitted by the bankruptcy trustee within seven days of the receipt of the
report and determine whether the bankruptcy trustee should be released
under section 148. The bankruptcy trustee shall retain sufficient sums from
the estate of the bankrupt to meet the expenses of convening and conducting
the meeting required under this section during the administration of the
estate.

Discharge order (Section 138)

The bankruptcy trustee shall apply to the Adjudicating Authority for a
discharge order –

(a) on the expiry of one year from the bankruptcy commencement date; or

(b) within seven days of the approval of the committee of creditors of the
completion of administration of the estates of the bankrupt where such
approval is obtained prior to the period of one year.

The Adjudicating Authority shall pass a discharge order on an application
by bankruptcy trustee. A copy of Discharge order shall be provided to the

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Board, for the purpose of recording an entry in the register referred to in
section 196.

Effect of discharge (Section 139)

The discharge order shall release the bankrupt from all the bankruptcy debts,
Provided that a discharge shall not –
(a) affect the functions of the bankruptcy trustee; or
(b) affect the operation of the provisions of Chapter IV and V of Part III:
(c) release the bankrupt from any debt incurred by means of fraud or breach

of trust to which he was a party; or
(d) discharge the bankrupt from any excluded debt.

Disqualification of bankrupt (Section 140)

The bankrupt shall, from the bankruptcy commencement date, be subject to
the disqualifications mentioned as below:
(a) being appointed or acting as a trustee or representative in respect of any

trust, estate or settlement;
(b) being appointed or acting as a public servant;
(c) being elected to any public office where the appointment to such office is

by election; and
(d) being elected or sitting or voting as a member of any local authority.
Any disqualification to which a bankrupt may be subject under this section
shall cease to have effect, if the bankruptcy order against him is modified or
recalled under section 142 or he is discharged under section 138.

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Provisions w.r.t. Bankruptcy Process for PG to CD under IBC

Restrictions on bankrupt (Section 141)

A bankrupt, from the bankruptcy commencement date, shall, –
(a) not act as a director of any company, or directly or indirectly take part in or

be concerned in the promotion, formation or management of a company;
(b) without the previous sanction of the bankruptcy trustee, be prohibited from

creating any charge on his estate or taking any further debt;
(c) be required to inform his business partners that he is undergoing a

bankruptcy process;
(d) prior to entering into any financial or commercial transaction of such value

as may be prescribed, either individually or jointly, inform all the parties
involved in such transaction that he is undergoing a bankruptcy process;
(e) without the previous sanction of the Adjudicating Authority, be
incompetent to maintain any legal action or proceedings in relation to the
bankruptcy debts; and
(f) not be permitted to travel overseas without the permission of the
Adjudicating Authority.
Any restriction to which a bankrupt may be subject under this section shall
cease to have effect, if the bankruptcy order against him is modified or
recalled under section 142 or he is discharged under section 138.

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Modification or recall of bankruptcy order (Section 142)

The Adjudicating Authority may, on an application or suo motu, modify or
recall a bankruptcy order, whether or not the bankrupt is discharged, if it
appears to the Adjudicating Authority that —
(a) there exists an error apparent on the face of such order; or
(b) both the bankruptcy debts and the expenses of the bankruptcy have, after

the making of the bankruptcy order, either been paid for or secured to the
satisfaction of the Adjudicating Authority.
Where the Adjudicating Authority modifies or recalls the bankruptcy order
under this section, any sale or other disposition of property, payment made
or other things duly done by the bankruptcy trustee shall be valid except that
the property of the bankrupt shall vest in such person as the Adjudicating
Authority may appoint or, in default of any such appointment, revert to the
bankrupt on such terms as the Adjudicating Authority may direct. The
modification or recall of the order by the Adjudicating Authority shall be
binding on all creditors so far as it relates to any debts due to them which
form a part of the bankruptcy.

40
Chapter 6

Provisions with respect to eligibility of
Bankruptcy Trustee for appointment,
remuneration and role of Bankruptcy
Trustee in Bankruptcy Process for
Personal Guarantors to Corporate
Debtors under IBC

Regulation 3 of the Insolvency and Bankruptcy Board of India (Bankruptcy
Process for Personal Guarantors to Corporate Debtors) Regulations, 2019

Eligibility of bankruptcy trustee

1. An insolvency professional shall be eligible to be appointed as a
bankruptcy trustee for a bankruptcy process, if-

(a) he, the insolvency professional entity of which he is a partner or a
director, and all the partners and directors of the said insolvency
professional entity are independent of the guarantor;

(b) he is not subject to any ongoing disciplinary proceeding or a
restraint order of the Board or of the insolvency professional
agency of which he is a professional member; and

(c) the insolvency professional entity of which he is a partner or a
director, or any other partner or director of such insolvency
professional entity does not represent any party in the bankruptcy
process.

Explanation. - For the purposes of this sub-regulation, a person shall
be considered independent of the guarantor, if he-

(a) is not an associate of the guarantor;

(b) is not a related party of the corporate debtor; and

(c) has not acted or is not acting as interim resolution professional,
resolution professional or liquidator in respect of the corporate
debtor.
HB on Personal Guarantors to Corporate Debtors under IBC, 2016

2. A bankruptcy trustee, who has been an auditor of the guarantor at any
time during the preceding three years, shall make a disclosure of
remuneration received, year-wise for such audit, to the committee.

3. An insolvency professional, other than who has filed an application under
section 122 or 123 on behalf of a guarantor or a creditor, as the case may
be, shall provide a written consent in Form A to the Adjudicating Authority
before his appointment as bankruptcy trustee in a bankruptcy process.

Regulation 5 of the Insolvency and Bankruptcy Board of India
(Bankruptcy Process for Personal Guarantors to Corporate Debtors)
Regulations, 2019

Appointment of professionals

A bankruptcy trustee may appoint accountants, registered valuers, advocates
or other professionals, as may be necessary, to assist him in the discharge of
his duties, obligations and functions for a reasonable remuneration and such
remuneration shall form part of the bankruptcy process cost:

Provided that the following persons shall not be appointed under this
regulation, namely-

(a) a relative of the bankruptcy trustee;

(b) a partner or director of the insolvency professional entity of which the
bankruptcy trustee is a partner or director;

(c) an insolvency professional who has acted or is acting as an interim
resolution professional, a resolution professional or a liquidator in
respect of the corporate debtor;

(d) an associate of the bankrupt;

(e) a related party of the corporate debtor.

Before appointing a professional, the bankruptcy trustee shall obtain a
disclosure of details of the existence of any pecuniary or personal
relationship with any of the creditors, the bankruptcy trustee, the corporate
debtor or the bankrupt, from the professional.

Fees of bankruptcy trustee (Section 144)

A bankruptcy trustee appointed for conducting the bankruptcy process shall
charge such fees as may be specified in proportion to the value of the estate
of the bankrupt. The fees for the conduct of the bankruptcy process shall be

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Provisions w.r.t. appointment eligibility, remuneration and role of Bankruptcy Trustee

paid to the bankruptcy trustee from the distribution of the estate of the
bankrupt in the manner provided in section 178.

Regulation 4 of the Insolvency and Bankruptcy Board of India (Bankruptcy
Process for Personal Guarantors to Corporate Debtors) Regulations, 2019

Fees of bankruptcy trustee.

1. The bankruptcy trustee shall be entitled to such fee and the fee shall be
paid in such manner as decided by the committee.

2. In all cases other than those covered under sub-regulation (1), the
bankruptcy trustee shall be entitled to a fee as a percentage of the amount
realised from the estate of the bankrupt and of the amount distributed from
such realisation, in accordance with Schedule I.

Replacement, Resignation and Vacancy in the office of
bankruptcy trustee (Section 145, 146, 147)

Where Committee of creditors is of the opinion that at any time during the
bankruptcy process, a bankruptcy trustee is required to be replaced, it may
replace him with another bankruptcy trustee. The Committee of creditors
may, at a meeting, by a vote of seventy-five per cent. of voting share,
propose to replace the bankruptcy trustee with another bankruptcy trustee.

A bankruptcy trustee may resign if -

a) he intends to cease practising as an insolvency professional; or

b) there is conflict of interest or change of personal circumstances which
preclude the further discharge of his duties as a bankruptcy trustee.

If a vacancy occurs in the office of the bankruptcy trustee for any reason
other than his replacement or resignation, the vacancy shall be filled by the
Adjudicating Authority in following manner.

The Committee of creditors may apply to the Adjudicating Authority for the
replacement of bankruptcy trustee. The Adjudicating Authority shall within
seven days of the receipt of the application direct the Board to recommend
for replacement of bankruptcy trustee. The Board shall, within ten days of the
direction of the Adjudicating Authority, recommend a bankruptcy trustee for
replacement against whom no disciplinary proceedings are pending. The
Adjudicating Authority shall, by an order, appoint the bankruptcy trustee as
recommended by the Board within fourteen days of receiving such
recommendation.

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The bankruptcy trustee appointed under section 145 shall give a notice of his
appointment to the bankrupt within seven days of his appointment. The
bankruptcy trustee appointed under section 146 and Section 147 shall give a
notice of his appointment to the CoC and to the bankrupt within seven days
of his appointment.

The Adjudicating Authority may give directions to the earlier bankruptcy
trustee-

(a) to share all information with the new bankruptcy trustee in respect of the
bankruptcy process; and

(b) to co-operate with the new bankruptcy trustee in such matters as may be
required.

Release of bankruptcy trustee (Section 148)

A. A bankruptcy trustee shall be released from his office with effect from the
date on which the Adjudicating Authority passes an order appointing a
new bankruptcy trustee in the event of replacement, resignation or
occurrence of vacancy under sections 145, 146 or 147, as the case may
be.

B. Notwithstanding the release under sub-section (1), the bankruptcy trustee
who has been so released, shall share all information with the new
bankruptcy trustee in respect of the bankruptcy process and co-operate
with the new bankruptcy trustee in such matters as may be required.

A bankruptcy trustee who has completed the administration of the bankruptcy
process shall be released of his duties with effect from the date on which the
committee of creditors approves the report of the bankruptcy trustee under
section 137.

ROLE OF BANKRUPTCY TRUSTEE

Sections under Code covering the related provisions:

Functions of bankruptcy trustee (Section 149)

The bankruptcy trustee shall perform the following functions –
(a) investigate the affairs of the bankrupt;
(b) realise the estate of the bankrupt; and

(c) distribute the estate of the bankrupt.

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Provisions w.r.t. appointment eligibility, remuneration and role of Bankruptcy Trustee

Duties of bankrupt towards bankruptcy trustee (Section
150)

The bankrupt shall assist the bankruptcy trustee in carrying out his functions
by -
(a) giving to the bankruptcy trustee the information of his affairs;
(b) attending on the bankruptcy trustee at such times as may be required;
(c) giving notice to the bankruptcy trustee of any of the following events which

have occurred after the bankruptcy commencement date, -
(i) acquisition of any property by the bankrupt;
(ii) devolution of any property upon the bankrupt;
(iii) increase in the income of the bankrupt;
(d) doing all other things as may be prescribed.
The bankrupt shall give notice of the increase in income or acquisition or
devolution of property within seven days of such increase, acquisition or
devolution. The bankrupt shall continue to discharge the duties even after the
discharge under section 138.

Rights of bankruptcy trustee (Section 151)

For the purpose of performing his functions, the bankruptcy trustee may, by
his official name -
(a) hold property of every description;
(b) make contracts;
(c) sue and be sued;
(d) enter into engagements in respect of the estate of the bankrupt;
(e) employ persons to assist him;
(f) execute any power of attorney, deed or other instrument; and
(g) do any other act which is necessary or expedient for the purposes of or in

connection with the exercise of his rights.

General Powers of bankruptcy trustee (Section 152)

The bankruptcy trustee may while discharging his functions -
(a) sell any part of the estate of the bankrupt;

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(b) give receipts for any money received by him;

(c) prove, rank, claim and draw a dividend in respect of such debts due to the
bankrupt as are comprised in his estate;

(d) where any property comprised in the estate of the bankrupt is held by any
person by way of pledge or hypothecation, exercise the right of
redemption in respect of any such property subject to the relevant contract
by giving notice to the said person;

(e) where any part of the estate of the bankrupt consists of securities in a
company or any other property which is transferable in the books of a
person, exercise the right to transfer the property to the same extent as
the bankrupt might have exercised it if he had not become bankrupt; and

(f) deal with any property comprised in the estate of the bankrupt to which
the bankrupt is beneficially entitled in the same manner as he might have
dealt with it.

Approval of creditors for certain acts (Section 153)

The bankruptcy trustee may after procuring the approval of the committee of
creditors, -

(a) carry on any business of the bankrupt as far as may be necessary for
winding it up beneficially;

(b) bring, institute or defend any legal action or proceedings relating to the
property comprised in the estate of the bankrupt;

(c) accept as consideration for the sale of any property a sum of money due
at a future time subject to certain stipulations such as security;

(d) mortgage or pledge any property for the purpose of raising money for the
payment of the debts of the bankrupt;

(e) where any right, option or other power forms part of the estate of the
bankrupt, make payments or incur liabilities with a view to obtaining, for
the benefit of the creditors, any property which is the subject of such right,
option or power;

(f) refer to arbitration or compromise on such terms as may be agreed, any
debts subsisting or supposed to subsist between the bankrupt and any
person who may have incurred any liability to the bankrupt;

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Provisions w.r.t. appointment eligibility, remuneration and role of Bankruptcy Trustee

(g) make compromise or other arrangement as may be considered expedient,
with the creditors;

(h) make compromise or other arrangement as he may deem expedient with
respect to any claim arising out of or incidental to the bankrupt's estate;

(i) appoint the bankrupt to -
(A) supervise the management of the estate of the bankrupt or any part
of it;
(B) carry on his business for the benefit of his creditors;
(C) assist the bankruptcy trustee in administering the estate of the
bankrupt.

Vesting of estate of bankrupt in bankruptcy trustee
(Section 154)

The estate of the bankrupt shall vest in the bankruptcy trustee immediately
from the date of his appointment. The vesting shall take effect without any
conveyance, assignment or transfer.

Estate of bankrupt (Section 155)

The estate of the bankrupt shall include
(a) all property belonging to or vested in the bankrupt at the bankruptcy

commencement date;
(b) the capacity to exercise and to initiate proceedings for exercising all such

powers in or over or in respect of property as might have been exercised
by the bankrupt for his own benefit at the bankruptcy commencement date
or before the date of the discharge order passed under section 138; and
(c) all property which by virtue of any of the provisions of this Chapter is
comprised in the estate.
The estate of the bankrupt shall not include –
(a) excluded assets;
(b) property held by the bankrupt on trust for any other person;
(c) all sums due to any workman or employee from the provident fund, the
pension fund and the gratuity fund; and

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(d) such assets as may be notified by the Central Government in consultation
with any financial sector regulator.

Delivery of property and documents to bankruptcy
trustee (Section 156)

The bankrupt, his banker or agent or any other person having possession of
any property, books, papers or other records which bankruptcy trustee is
required to take possession for the purposes of the bankruptcy process shall
deliver the said property and documents to the bankruptcy trustee.

Acquisition of control by bankruptcy trustee (Section
157)

The bankruptcy trustee shall take possession and control of all property,
books, papers and other records relating to the estate of the bankrupt or
affairs of the bankrupt which belong to him or are in his possession or under
his control. Where any part of the estate of the bankrupt consists of things in
actionable claims, they shall be deemed to have been assigned to the
bankruptcy trustee without any notice of the assignment.

SCHEDULE I
FEES OF BANKRUPTCY TRUSTEE [Under regulation 4(2)]

Amount of realization in Percentage of fee on the amount
rupees (less bankruptcy realized

process cost)

in the in the in the Thereafter
first six next next
months three three
months months

On the first 25 lakh 10.00 7.50 5.00 3.75

On the next 50 lakh 7.50 5.00 3.75 2.80

On the next 1 crore 5.00 3.75 2.50 1.88

On the next 9 crore 3.75 2.80 1.88 1.41

On the next 40 crore 2.50 1.88 1.25 0.94

On the next 50 crore 1.25 0.94 0.68 0.51

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Amount of realization in Percentage of fee on the amount
rupees (less bankruptcy realized

process cost)

On further sums realized 0.25 0.19 0.13 0.10

Amount of distribution in rupees Percentage of fee on the amount
distributed

On the first 50 lakh 5.00 3.75 3.00 1.88

On the next 75 lakh 3.75 3.00 1.88 1.41

On the next 1 crore 2.50 1.88 1.25 0.94

On the next 9 crore 1.88 1.40 0.94 0.71

On the next 40 crore 1.25 0.94 0.63 0.47

On the next 50 crore 0.63 0.48 0.34 0.25

On further sums distributed 0.13 0.10 0.06 0.05

49
Chapter 7

Provisions with respect to submission
of various reports by Bankruptcy

Trustee during Bankruptcy Process
for Personal Guarantors to Corporate

Debtors

1. Reports by bankruptcy trustee (Regulation 7 of the Insolvency and
Bankruptcy Board of India (Bankruptcy Process for Personal Guarantors to
Corporate Debtors) Regulations, 2019).

The bankruptcy trustee shall prepare and submit the following reports to the
Adjudicating Authority and the committee -

(a) a preliminary report;

(b) progress reports; and

(c) a final report

(a) Preliminary report (Regulation 8)

1) The bankruptcy trustee shall submit a preliminary report to the
Adjudicating Authority and the committee within ninety days of the
bankruptcy commencement date.

2) The bankruptcy trustee shall send a copy of the preliminary report to the
bankrupt at the time of submission of the report.

3) The preliminary report shall include the following details-

a) a list of the assets and liabilities of the bankrupt as on the
bankruptcy commencement date based on the books of the
bankrupt:

Provided that if the bankruptcy trustee has reasons to believe, to be
recorded in writing, that the books of the bankrupt are not reliable,
he shall also provide such estimates based on reliable records and
data otherwise available to him.
Provisions w.r.to submission of various reports by Bankruptcy Trustee

b) the proposed plan of action in relation to administration of the
estate, including the timeline in which it is proposed to be carried
out and the estimated costs;

c) any further inquiry to be made in respect of the assets, business or
affairs of the bankrupt;

d) details of the assets which are intended to be realised, including
the following-

(i) value of the assets, valued in accordance with regulation 33;

(ii) intended manner of realisation of the assets and reasons
thereof;

(iii) expected amount of realisation;

(iv) any other information that may be relevant for the realisation
of the assets.

e) details of the excluded assets and other assets under sub-section
(2) of section 155.

4) The preliminary report shall be confidential during the bankruptcy process,
unless the Adjudicating Authority permits any person to access it subject
to such terms and conditions, as it may consider appropriate.

(b) Progress reports (Regulation 10)

1) The bankruptcy trustee shall submit progress reports to the Adjudicating
Authority and to the committee within fifteen days after the end of every
quarter:

Provided that if an insolvency professional ceases to act as a bankruptcy
trustee during the bankruptcy process, he shall file a progress report for
the quarter up to the date of his so ceasing to act, within fifteen days of
such cessation.

2) The bankruptcy trustee shall send a copy of the progress report to the
bankrupt at the time of submission of the report under sub-regulation (1).

3) The progress report shall include-

(a) appointment, tenure of appointment and cessation of appointment
of professionals;

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HB on Personal Guarantors to Corporate Debtors under IBC, 2016

(b) a statement indicating the progress in the bankruptcy process
containing-
(i) distribution of dividend and interim dividend;
(ii) any material change in the expected realisation for any asset
and basis for such change;
(iii) any material change in the value of assets or liabilities of the
bankrupt and basis for such change;
(iv) any material change on estimated cost of bankruptcy
process and basis for such change;
(v) distribution of unsold property made to the creditors;
(vi) details of any property that remains to be realised;
(vii) list of creditors; and
(viii) any other relevant information.

(c) an asset sale report with the following details of the assets
realised–
(i) realised value;
(ii) cost of realisation;
(iii) manner and mode of realisation, including details as per
Schedule II;
(iv) reasons for any reduction in the realisable value compared
to the value mentioned in the preliminary report; and
(v) details of the persons in favour of whom the property has
been realised.

(d) details of fee and remuneration due to and received by the
bankruptcy trustee along with a description of the activities carried
out by him;

(e) details of the fee and remuneration paid to professionals appointed
by the bankruptcy trustee along with a description of activities
carried out by them;

(f) other expenses incurred by the bankruptcy trustee in relation to the
bankruptcy process;

(g) status of any material litigation by or against the bankrupt;

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Provisions w.r.to submission of various reports by Bankruptcy Trustee

(h) filing of and developments in relation to disclaimer of onerous
properties or leasehold interests under sections 160 and 162, or
transactions under sections 164, 165 and 167.

(i) accounts maintained by the bankruptcy trustee showing the
receipts and payments made during the period of the report, as
well as cumulative receipts and payments made since the
bankruptcy commencement date; and

(j) any other relevant aspect of the bankruptcy process.

4) The progress report for the fourth quarter of the financial year shall
enclose audited accounts of the receipts and payments of the bankrupt for
the financial year.

5) The progress reports shall be confidential during the bankruptcy process,
unless the Adjudicating Authority permits any person to access it on
specified terms and conditions.

Illustration

Where an insolvency professional becomes a bankruptcy trustee on 13th
February, 2020 and ceases to act as such on 12th February, 2021, he shall
submit progress reports as under:

Report Period covered in the Quarter Last Date of Submission of

No. Report

1 13th February - 31st March, 2020 15th April, 2020

2 April - June, 2020 15th July, 2020

3 July - September, 2020 15th October, 2020

4 October - December, 2020 15th January, 2021

5 January - 12th February, 2021 27th February, 2021

He shall submit the audited accounts of receipts and payments as under:

Account Period covered in the Last Date of Submission of
No.
1 Quarter Report

2 13th February - 31st March, 15th April, 2020
2020

1st April, 2019 - 12th 27th February, 2021
February, 2021

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(c) Final report (Regulation 11)
1) The final report shall contain an account of the completion of the

administration and distribution of the estate of the bankrupt, including -
(a) manner of realisation of the assets of the bankrupt;
(b) manner of distribution of the dividends amongst the creditors;
(c) details regarding the discharge of the bankrupt;
(d) unclaimed dividend, if any;
(e) surplus dividend, if any; and
(f) if the bankruptcy process cost exceeds the estimated cost provided

in the preliminary report, along with reasons for the same.
2) The bankruptcy trustee shall file the final report with the Adjudicating

Authority along with the application under sub-section (1) of section 138.

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Chapter 8

Provisions with respect to proceeds
of Bankruptcy Process and
distribution of proceeds

Chapter VI of Insolvency and Bankruptcy Board of India (Bankruptcy
Process for Personal Guarantors to Corporate Debtors) Regulations, 2019
deals with Proceeds of Bankruptcy Process and Distribution of Proceeds
as per the Regulations:

1. Bank account for bankruptcy process (Regulation 32)

1) The bankruptcy trustee shall open a bank account in the name of the
bankrupt followed by the words ‘in bankruptcy process’, in a scheduled
bank, for the receipt of all moneys due to the bankrupt.

2) The bankruptcy trustee shall deposit in the bank account opened under
sub-regulation (1) all moneys, including cheques and demand drafts
received by him as the bankruptcy trustee of the bankrupt, and the
realisations of each day shall be deposited into the bank account, without
any deduction, not later than the next working day.

3) The bankruptcy trustee may maintain cash of ten thousand rupees or such
higher amount, as may be permitted by the Adjudicating Authority to meet
bankruptcy process costs.

4) All payments out of the account by the bankruptcy trustee above five
thousand rupees shall be made by cheques drawn or online banking
transactions against the bank account.

2. Distribution of dividend to claimant of deceased creditor (Regulation
33)

1) In the event an application is made by a claimant or heir of a deceased
creditor for receiving dividend payable to such deceased creditor, the
bankruptcy trustee shall satisfy himself as to the claimant's right and title
to receive the dividend, and may call for evidence regarding such right or
title.

2) On being satisfied of the veracity of the claim as per sub-regulation (1),
HB on Personal Guarantors to Corporate Debtors under IBC, 2016

the bankruptcy trustee may apply to the Adjudicating Authority for
sanctioning the payment of such dividend or return to the claimant.

3. Distribution of dividend (Regulation 34)

1) Subject to the provisions of sections 174 and 178, the bankruptcy trustee
shall not commence distribution of dividend unless a preliminary report is
filed with the Adjudicating Authority.

2) The bankruptcy process cost shall be deducted before any dividend is
distributed under this regulation.

4. Return of amount (Regulation 35)

A creditor shall forthwith return any amount received by him in
distribution, which he was not entitled to at the time of distribution, or
subsequently.

5. Unclaimed proceeds of bankruptcy or undistributed assets
(Regulation 36)

1) After filing the final report under regulation 11, the bankruptcy trustee
shall, within three days from the date of such filing, apply to the
Adjudicating Authority for an order to credit to the Insolvency and
Bankruptcy Fund formed under the Code, any unclaimed dividends of
bankruptcy process or undistributed asset or any other balance amount
payable to the creditors, left with him.

2) Without prejudice to any penalty that may be imposed by the Board, the
bankruptcy trustee shall be liable to pay interest at the rate of twelve
percent per annum on the amount retained by him under sub-regulation
(1), if he fails to-

a. apply to the Adjudicating Authority within three days from the date
of filing;

b. credit to the Fund within three days from the date of order of the
Adjudicating Authority.

3) The bankruptcy trustee shall, when crediting the amount referred to in
sub-regulation (1), furnish to the Board, a statement setting forth the
following –

a. the names and last known address of the creditors entitled to the
unclaimed dividend or undistributed asset or any other balance;

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Provisions w.r.to proceeds of BP and distribution of proceeds

b. the amount of the unclaimed dividend or any other balance for each
creditor under (a);

c. the value of the undistributed assets.
4) The bankruptcy trustee shall be entitled to a receipt from the Board for

any amount deposited by him under sub- regulation (2), and such receipt
shall be proof of credit by him.
5) A person claiming to be entitled to any amount paid into the Insolvency
and Bankruptcy Fund may apply to the Board for an order for payment of
the amount claimed.
6) The Board may, if satisfied that the person referred to in sub-regulation (5)
is entitled to the whole or any part of the amount claimed, make an order
for the payment to that person of the sum due to him, after taking such
security from him as it may think fit.
7) Any amount paid into the Insolvency and Bankruptcy Fund under sub-
regulation (1), which remains unclaimed for a period of fifteen years, shall
be liable to be utilised for the purposes of the Insolvency and Bankruptcy
Fund.
Sections under Code covering the related provisions:

Restrictions on disposition of property (Section158)

Any disposition of property made by the debtor, during the period between
the date of filing of the application for bankruptcy and the bankruptcy
commencement date shall be void. Any disposition of property shall not give
rise to any right against any person, in respect of such property, even if he
has received such property before the bankruptcy commencement date in
a) good faith;
b) for value; and
c) without notice of the filing of the application for bankruptcy.
For the purposes of this section, the term “property” means all the property of
the debtor, whether or not it is comprised in the estate of the bankrupt, but
shall not include property held by the debtor in trust for any other person.

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After-acquired property of bankrupt (Section 159)

The bankruptcy trustee shall be entitled to claim for the estate of the
bankrupt, any after-acquired property by giving a notice to the bankrupt. A
notice shall not be served in respect of -

a) excluded assets, or

b) any property which is acquired by or devolves upon the bankrupt after a
discharge order is passed under section 138.

The notice shall be given within fifteen days from the day on which the
acquisition or devolution of the after-acquired property comes to the
knowledge of the bankruptcy trustee.

Anything which comes to the knowledge of the bankruptcy trustee shall be
deemed to have come to the knowledge of the successor of the bankruptcy
trustee at the same time; and anything which comes to the knowledge of a
person before he is appointed as a bankruptcy trustee shall be deemed to
have come to his knowledge on the date of his appointment as bankruptcy
trustee.

The bankruptcy trustee shall not be entitled, to claim from any person who
has acquired any right over after-acquired property, in good faith, for value
and without notice of the bankruptcy.

A notice may be served after the expiry of the period only with the approval
of the Adjudicating Authority.

For the purposes of this section, the term "after-acquired property" means
any property which has been acquired by or has devolved upon the bankrupt
after the bankruptcy commencement date.

Onerous property of bankrupt (Section 160)

The bankruptcy trustee may, by giving notice to the bankrupt or any person
interested in the onerous property, disclaim any onerous property, which
forms a part of the estate of the bankrupt. The bankruptcy trustee may give
the notice notwithstanding that he has taken possession of the onerous
property, endeavoured to sell it or has exercised rights of ownership in
relation to it.

A notice of disclaimer shall -

a) determine, as from the date of such notice, the rights, interests and
liabilities of the bankrupt in respect of the onerous property disclaimed;

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b) discharge the bankruptcy trustee from all personal liability in respect of
the onerous property as from the date of appointment of the
bankruptcy trustee.

A notice of disclaimer shall not be given in respect of the property which has
been claimed for the estate of the bankrupt under section 155 without the
permission of the committee of creditors. A notice of disclaimer shall not
affect the rights or liabilities of any other person, and any person who
sustains a loss or damage in consequence of the operation of a disclaimer
under this section shall be deemed to be a creditor of the bankrupt to the
extent of the loss or damage.

The term “onerous property” means -

(i) any unprofitable contract; and

(ii) any other property comprised in the estate of the bankrupt which is
unsaleable or not readily saleable, or is such that it may give rise to a
claim.

Notice to disclaim onerous property (Section 161)

No notice of disclaimer under section 160 shall be necessary if -

a) a person interested in the onerous property has applied in writing to the
bankruptcy trustee or his predecessor requiring him to decide whether the
onerous property should be disclaimed or not; and

b) a decision under clause (a) has not been taken by the bankruptcy trustee
within seven days of receipt of the notice.

Any onerous property which cannot be disclaimed shall be deemed to be part
of the estate of the bankrupt.

An onerous property is said to be disclaimed where notice in relation to that
property has been given by the bankruptcy trustee.

Disclaimer of leaseholds (Section 162)

1) The bankruptcy trustee shall not be entitled to disclaim any leasehold
interest, unless a notice of disclaimer has been served on every interested
person and –

(a) no application objecting to the disclaimer by the interested person,
has been filed with respect to the leasehold interest, within fourteen
days of the date on which notice was served; and

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(b) where the application objecting to the disclaimer has been filed by
the interested person, the Adjudicating Authority has directed under
section 163 that the disclaimer shall take effect.

2) Where the Adjudicating Authority gives a direction under clause (b) of sub-
section (1), it may also make order with respect to fixtures, improvements
by tenant and other matters arising out of the lease as it may think fit.

Challenge against disclaimed property (Section 163)

An application challenging the disclaimer may be made by the following
persons to the Adjudicating Authority-

(a) any person who claims an interest in the disclaimed property; or

(b) any person who is under any liability in respect of the disclaimed property;
or

(c) where the disclaimed property is a dwelling house, any person who on the
date of application for bankruptcy was in occupation of or entitled to
occupy that dwelling house.

The Adjudicating Authority may on an application, make an order for the
vesting of the disclaimed property in, or for its delivery to any of the persons
mentioned. The Adjudicating Authority shall not make an order in favour of a
person who has made an application except where it appears to the
Adjudicating Authority that it would be just to do so for the purpose of
compensating the person.

The effect of an order shall be taken into account while assessing loss or
damage sustained by any person in consequence of the disclaimer.

Undervalued transactions (Section 164)

A bankrupt enters into an undervalued transaction with any person if-

(a) he makes a gift to that person;

(b) no consideration has been received by that person from the bankrupt;

(c) it is in consideration of marriage; or

(d) it is for a consideration, the value of which in money or money's worth is
significantly less than the value in money or money's worth of the
consideration provided by the bankrupt.

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The bankruptcy trustee may apply to the Adjudicating Authority in respect of
an undervalued transaction between a bankrupt and any person.

The undervalued transaction should have

(a) been entered into during the period of two years ending on the filing of the
application for bankruptcy; and

(b) caused bankruptcy process to be triggered.

A transaction between a bankrupt and his associate entered into during the
period of two years preceding the date of making of the application for
bankruptcy shall be deemed to be an undervalued transaction.

On the application of the bankruptcy trustee, the Adjudicating Authority may -

(a) pass an order declaring an undervalued transaction void;

(b) pass an order requiring any property transferred as a part of an
undervalued transaction to be vested with the bankruptcy trustee as a part
of the estate of the bankrupt; and

(c) pass any other order it thinks fit for restoring the position to what it would
have been if the bankrupt had not entered into the undervalued
transaction.

The order shall not be passed if it is proved by the bankrupt that the
transaction was undertaken in the ordinary course of business of the
bankrupt:

Preference transactions (Section 165)

A bankrupt shall be deemed to have entered into a transaction giving
preference to any person if –

(a) the person is the creditor or surety or guarantor for any debt of the
bankrupt; and

(b) the bankrupt does anything or suffers anything to be done which has the
effect of putting that person into a position which, in the event of the
debtor becoming a bankrupt, will be better than the position he would
have been in, if that thing had not been done.

The bankruptcy trustee may apply to the Adjudicating Authority for an order,
if a bankrupt has given a preference to any person.

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The transaction giving preference to an associate of the bankrupt should
have been entered into by the bankrupt with the associate during the period
of two years ending on the date of the application for bankruptcy.
Transaction giving preference should have been entered into by the bankrupt
during the period of six months ending on the date of the application for
bankruptcy. Further the transaction giving preference should have caused
the bankruptcy process to be triggered.

On the application of the bankruptcy trustee, the Adjudicating Authority
may –

(a) pass an order declaring a transaction giving preference void;

(b) pass an order requiring any property transferred in respect of a
transaction giving preference to be vested with the bankruptcy trustee as
a part of the estate of the bankrupt; and

(c) pass any other order it thinks fit for restoring the position to what it would
have been if the bankrupt had not entered into the transaction giving
preference.

The Adjudicating Authority shall not pass an order unless the bankrupt was
influenced in his decision of giving preference to a person by a desire to
produce in relation to that person an effect of giving preference.

Effect of order (Section 166)

If the interest was acquired or the benefit was received -

(a) in good faith;

(b) for value;

(c) without notice that the bankrupt entered into the transaction at an under-
value or for giving preference;

(d) without notice that the bankrupt has filed an application for bankruptcy or
a bankruptcy order has been passed; and

(e) by any person who at the time of acquiring the interest or receiving the
benefit was not an associate of the bankrupt.

An order passed by the Adjudicating Authority shall not, -

(a) give rise to a right against a person interested in the property which was
acquired in an undervalued transaction or a transaction giving preference,

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whether or not he is the person with whom the bankrupt entered into such
transaction; and
(b) require any person to pay a sum to the bankruptcy trustee in respect of
the benefit received from the undervalued transaction or a transaction
giving preference, whether or not he is the person with whom the bankrupt
entered into such transaction.
Any sum required to be paid to the bankruptcy trustee shall be included in the
estate of the bankrupt.

Extortionate credit transactions (Section 167)

An extortionate credit transaction is a transaction for or involving the
provision of credit to the bankrupt by any person-
(a) on terms requiring the bankrupt to make exorbitant payments in respect of

the credit provided; or
(b) which is unconscionable under the principles of law relating to contracts.
Any debt extended by a person regulated for the provision of financial
services in compliance with the law in force in relation to such debt, shall not
be considered as an extortionate credit transaction
On an application by the bankruptcy trustee, the Adjudicating Authority may
make an order under this section in respect of extortionate credit
transactions to which the bankrupt is or has been a party.
The transactions should have been entered into by the bankrupt during the
period of two years ending on the bankruptcy commencement date.
An order of the Adjudicating Authority may –
(a) set aside the whole or part of any debt created by the transaction;
(b) vary the terms of the transaction or vary the terms on which any security

for the purposes of the transaction is held;
(c) require any person who has been paid by the bankrupt under any

transaction, to pay a sum to the bankruptcy trustee;
(d) require any person to surrender to the bankruptcy trustee any property of

the bankrupt held as security for the purposes of the transaction.
Any sum paid or any property surrendered to the bankruptcy trustee shall be
included in the estate of the bankrupt.

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Obligations under contracts (Section 168)

1) This section shall apply where a contract has been entered into by the
bankrupt with a person before the bankruptcy commencement date.

2) Any party to a contract, other than the bankrupt , may apply to the
Adjudicating Authority for –

(a) an order discharging the obligations of the applicant or the
bankrupt under the contract; and

(b) payment of damages by the party or the bankrupt, for non-
performance of the contract or otherwise.

3) Any damages payable by the bankrupt by virtue of an order shall be
provable as bankruptcy debt.

4) When a bankrupt is a party to the contract under this section jointly with
another person, that person may sue or be sued in respect of the contract
without joinder of the bankrupt.

Continuance of proceedings on death of bankrupt
(Section 169)

If a bankrupt dies, the bankruptcy proceedings shall, continue as if he were
alive.

Administration of estate of deceased bankrupt (Section
170)

All the provisions of Chapter V relating to the administration and distribution
of the estate of the bankrupt shall, so far as the same are applicable, apply to
the administration of the estate of a deceased bankrupt.

While administering the estate of a deceased bankrupt, the bankruptcy
trustee shall have regard to the claims by the legal representative of the
deceased bankrupt to payment of the proper funeral and testamentary
expenses incurred by them. The claims shall rank equally to the secured
creditors in the priority provided under section 178.

If, on the administration of the estate of a deceased bankrupt, any surplus
remains in the hands of the bankruptcy trustee after payment in full of all the
debts due from the deceased bankrupt, together with the costs of the
administration and interest as provided under section 178, such surplus shall

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be paid to the legal representatives of the estate of the deceased bankrupt or
dealt with in such manner as may be prescribed.

Proof of debt (Section 171)

The bankruptcy trustee shall give notice to each of the creditors to submit
proof of debt within fourteen days of preparing the list of creditors.
The proof of debt shall –
(a) require the creditor to give full particulars of debt, including the date on

which the debt was contracted and the value at which that person
assesses it;
(b) require the creditor to give full particulars of the security, including the
date on which the security was given and the value at which that person
assesses it;
(c) be in such form and manner as may be prescribed.
In case the creditor is a decree holder against the bankrupt, a copy of the
decree shall be a valid proof of debt. Where a debt bears interest, that
interest shall be provable as part of the debt except in so far as it is owed in
respect of any period after the bankruptcy commencement date. The
bankruptcy trustee shall estimate the value of any bankruptcy debt which
does not have a specific value.
The value assigned by the bankruptcy trustee shall be the amount provable
by the concerned creditor. A creditor may prove for a debt where payment
would have become due at a date later than the bankruptcy commencement
date as if it were owed presently and may receive dividends in a manner as
may be prescribed.
Where the bankruptcy trustee serves a notice and the person on whom the
notice is served does not file a proof of security within thirty days after the
date of service of the notice, the bankruptcy trustee may, with leave of the
Adjudicating Authority, sell or dispose of any property that was subject to the
security, free of that security.

Proof of debt by secured creditors (Section 172)

(1) Where a secured creditor realises his security, he may produce proof of
the balance due to him.

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(2) Where a secured creditor surrenders his security to the bankruptcy trustee
for the general benefit of the creditors, he may produce proof of his whole
claim.

Mutual credit and set-off (Section 173)

(1) Where before the bankruptcy commencement date, there have been
mutual dealings between the bankrupt and any creditor, the bankruptcy
trustee shall -

(a) take an account of what is due from each party to the other in
respect of the mutual dealings and the sums due from one party
shall be set off against the sums due from the other; and

(b) only the balance shall be provable as a bankruptcy debt or as the
amount payable to the bankruptcy trustee as part of the estate of
the bankrupt.

(2) Sums due from the bankrupt to another party shall not be included in the
account taken by the bankruptcy trustee under sub-section (1), if that
other party had notice at the time they became due that an application for
bankruptcy relating to the bankrupt was pending.

Distribution of interim dividend (Section 174)

(1) Whenever the bankruptcy trustee has sufficient funds in his hand, he may
declare and distribute interim dividend among the creditors in respect of
the bankruptcy debts which they have respectively proved.

(2) Where the bankruptcy trustee has declared any interim dividend, he shall
give notice of such dividend and the manner in which it is proposed to be
distributed.

(3) In the calculation and distribution of the interim dividend, the bankruptcy
trustee shall make provision for -

(a) any bankruptcy debts which appear to him to be due to persons
who, by reason of the distance of their place of residence, may not
have had sufficient time to tender and establish their debts; and

(b) any bankruptcy debts which are subject of claims which have not
yet been determined;

(c) disputed proofs and claims; and

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(d) expenses necessary for the administration of the estate of the
bankrupt.

Distribution of property (Section 175)

(1) The bankruptcy trustee may, with the approval of the committee of
creditors, divide in its existing form amongst the creditors, according to its
estimated value, any property in its existing form which from its peculiar
nature or other special circumstances cannot be readily or
advantageously sold.

(2) An approval shall be sought by the bankruptcy trustee for each
transaction, and a person dealing with the bankruptcy trustee in good faith
and for value shall not be required to enquire whether any approval
required has been given.

(3) Where the bankruptcy trustee has done anything without the approval of
the committee of creditors, the committee may, for the purpose of
enabling him to meet his expenses out of the estate of the bankrupt, ratify
the act of the bankruptcy trustee.

(4) The committee of the creditors shall not ratify the act of the bankruptcy
trustee unless it is satisfied that the bankruptcy trustee acted in a case of
urgency and has sought its ratification without undue delay.

Final dividend (Section 176)

(1) Where the bankruptcy trustee has realised the entire estate of the
bankrupt or so much of it as could be realised in the opinion of the
bankruptcy trustee, he shall give notice -

(a) of his intention to declare a final dividend; or

(b) that no dividend or further dividend shall be declared.

(2) The notice shall contain such particulars as may be prescribed and shall
require all claims against the estate of the bankrupt to be established by a
final date specified in the notice.

(3) The Adjudicating Authority may, on the application of any person
interested in the administration of the estate of the bankrupt, postpone the
final date referred.

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(4) After the final date, the bankruptcy trustee shall -

(a) defray any outstanding expenses of the bankruptcy out of the
estate of the bankrupt; and

(b) if he intends to declare a final dividend, declare and distribute that
dividend among the creditors who have proved their debts, without
regard to the claims of any other persons.

(5) If a surplus remains after payment in full with interest to all the creditors of
the bankrupt and the payment of the expenses of the bankruptcy, the
bankrupt shall be entitled to the surplus.

(6) Where a bankruptcy order has been passed in respect of one partner in a
firm, a creditor to whom the bankrupt is indebted jointly with the other
partners in the firm or any of them shall not receive any dividend out of the
separate property of the bankrupt until all the separate creditors have
received the full amount of their respective debts.

Claims of creditors (Section 177)

(1) A creditor who has not proved his debt before the declaration of any
dividend is not entitled to disturb, by reason that he has not participated in
it, the distribution of that dividend or any other dividend declared before
his debt was proved, but –

(a) when he has proved the debt, he shall be entitled to be paid any
dividend or dividends which he has failed to receive, out of any
money for the time being available for the payment of any further
dividend; and

(b) any dividend or dividends payable to him shall be paid before that
money is applied to the payment of any such further dividend.

(2) No action shall lie against the bankruptcy trustee for a dividend, but if the
bankruptcy trustee refuses to pay a dividend payable, the Adjudicating
Authority may order him to –

(a) pay the dividend; and

(b) pay, out of his own money -

(i) interest on the dividend; and

(ii) the costs of the proceedings in which the order to pay has
been made.

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Order of Priority of Distribution:

Priority of payment of debts (Section 178)

(1) Notwithstanding anything to the contrary contained in any law enacted by
the Parliament or the State Legislature for the time being in force, in the
distribution of the final dividend, the following debts shall be paid in priority
to all other debts —
(a) firstly, the costs and expenses incurred by the bankruptcy trustee
for the bankruptcy process in full;
(b) secondly, -
i. the workmen’s dues for the period of twenty-four months
preceding the bankruptcy commencement date; and
ii. debts owed to secured creditors
(c) thirdly, wages and any unpaid dues owed to employees, other than
workmen, of the bankrupt for the period of twelve months
preceding the bankruptcy commencement date;
(d) fourthly, any amount due to the Central Government and the State
Government including the amount to be received on account of
Consolidated Fund of India and the Consolidated Fund of a State, if
any, in respect of the whole or any part of the period of two years
preceding the bankruptcy commencement date;
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(e) lastly, all other debts and dues owed by the bankrupt including
unsecured debts.

(2) The debts in each class specified in sub-section (1) shall rank in the order
mentioned in that sub-section but debts of the same class shall rank
equally amongst themselves, and shall be paid in full, unless the estate of
the bankrupt is insufficient to meet them, in which case they shall abate in
equal proportions between themselves.

(3) Where any creditor has given any indemnity or has made any payment of
moneys by virtue of which any asset of the bankrupt has been recovered,
protected or preserved, the Adjudicating Authority may make such order
as it thinks just with respect to the distribution of such asset with a view to
giving that creditor an advantage over other creditors in consideration of
the risks taken by him in so doing.

(4) Unsecured creditors shall rank equally amongst themselves unless
contractually agreed to the contrary by such creditors.

(5) Any surplus remaining after the payment of the debts under sub-section
(1) shall be applied in paying interest on those debts in respect of the
periods during which they have been outstanding since the bankruptcy
commencement date.

(6) Interest payments under sub-section (5) shall rank equally irrespective of
the nature of the debt.

(7) In the case of partners, the partnership property shall be applicable in the
first instance in payment of the partnership debts and the separate
property of each partner shall be applicable in the first instance in
payment of his separate debts.

(8) Where there is a surplus of the separate property of the partners, it shall
be dealt with as part of the partnership property; and where there is a
surplus of the partnership property, it shall be dealt with as part of the
respective separate property in proportion to the rights and interests of
each partner in the partnership property.

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Chapter 9

Offences and Penalties – For
misconduct during Insolvency and

Bankruptcy Process for Personal
Guarantors to Corporate Debtors

under IBC

Punishment for false information etc., contravention of provisions, false
information, concealment, etc., certain actions. (Section 184 to 187)

Section Offence Applicable Penalty
to

184(1) False information Creditor or Imprisonment for a term
etc. by creditor in debtor upto 1 year or fine upto
insolvency Rs. 5 lakhs or both.
resolution process

184(2) Creditor promises to Creditor Imprisonment for a term
vote in favour of the upto 2 year or fine upto
repayment plan three times the amount
dishonestly or its equivalent of such
money, property or
security accepted by the
creditor, or both.

185 Contravention of Insolvency Imprisonment for a term

provisions of this professional upto 6 months or fine of

part minimum Rs. 1 lakhs

upto Rs. 5 lakhs, or with

both.

186(a) False representation Bankrupt Imprisonment for a term
or wilful omission or upto 6 months or fine
concealment of any upto Rs. 5 lakhs, or
material information, both.
etc. by bankrupt
HB on Personal Guarantors to Corporate Debtors under IBC, 2016

186(b) Fraudulently has Bankrupt Imprisonment for a term
failed to provide or upto 1 year or fine upto
186(c) deliberately withheld Rs. 5 lakhs or both.
186(d) the production of,
186(e) destroyed, falsified Imprisonment for a term
186(f) or altered, his upto 6 months or fine
187 Books of Account, , upto Rs. 5 lakhs, or
etc. by bankrupt both.

Contravened the Bankrupt Imprisonment for a term
restrictions provided upto 6 months or fine
under section 140 or upto Rs. 5 lakhs, or
section 141 of the both.
Code Imprisonment for a term
upto 2 years or fine upto
Failed to deliver Bankrupt three times the value of
loss or both.
possession of Imprisonment for a term
upto 1 year or fine upto
property Rs. 5 lakhs, or both.
Imprisonment for a term
Failed to account for Bankrupt upto 3 years or fine not
any loss incurred less than three times
the amount of loss
Absconded or Bankrupt caused, or both.

attempts to Abscond

Punishment for Bankruptcy

certain actions trustee

72
Chapter 10

Practical aspects related to the
Insolvency and Bankruptcy Process
for Personal Guarantors to Corporate

Debtors under IBC

Circumstances which leads to initiation of personal guarantee:

Personal Guarantee

When seeking funding for a business, many business loans, financial
arrangements, or leases require the company director/other to sign a
personal guarantee as a form of security for the lender.

Large unpaid debts and continuing defaults by borrowers require the banks
and financial institutions to initiate proceedings for recovery of dues against
the principal borrowers as well as the guarantors.

The concept of guarantee is governed by the Indian Contract Act, 1872
("ICA"), where under the contract of guarantee puts an obligation on a surety
to honour the promise of principal debtor by paying the principal debtor's
present or future debt, provided to him by a creditor in case of default by the
principal debtor.

Options available with creditors (Financial Institutions), if guarantor
does not pay within the timeframe described.

Following on from this, guarantor needs to pay within the timeframe
described. If he does not, the creditor has two options:

(a) Initiate legal proceedings against personal guarantor for recovery of
dues under various legislations and forums, including the
Securitization and Reconstruction of Financial Assets and
Enforcement of Security Interest Act, 2002 for enforcement of security
against the guarantors and under the Recovery of Debts Due to Banks
and Financial Institutions Act, 1993 before the Debt Recovery
HB on Personal Guarantors to Corporate Debtors under IBC, 2016

Tribunals for recovery of debt against the guarantors etc. (other than
IBC in old regime) Normally it takes long time for recovery here.

(b) File petition/application for insolvency/bankruptcy under Insolvency
and Bankruptcy Code. IBC is a game changer to initiate actions
against guarantors. This is a time bound process, hence it is a very
effective mechanism available with creditors.

Even the RBI's circular dated September 9, 2014 issued with reference to
the Master Circular on Wilful Defaulters DBOD.No.CID.BC.3/20.16.003/2014-
15 dated July 1, 2014, clarified that when a payment default is made by the
principal debtor, the bank is entitled to proceed against the guarantor/surety
even without exhausting the remedies against the principal debtor. In case
the said guarantor refuses to comply with the demand made by the
creditor/bank, despite having sufficient means to make payment of the dues,
such guarantor would also be treated as a 'Wilful defaulter'.

Some of the earlier cases relating to guarantors are given below:

1. Variance in terms of the Contract:

As per section 133 of the Indian Contact Act, any variance, made without
surety's consent, in terms of the contract between the principal debtor and
the creditor, discharges surety as to transactions subsequent to the variance.
Thus, in case the guarantor successfully establishes that there have been
subsequent variations to the contract of guarantee to which the guarantor
was not privy to or had no knowledge of, the guarantor can be excused from
performing his obligations under law for all the subsequent transactions post
the variance.

The Hon'ble Bombay High Court in the matter of Keshavlal Hari Lal Setalvad
and Ors vs Pratapsingh Moholalbhai Sheth and Ors [ILR1932 56 Bom
101] elaborated the principles of variation of contract and discharge of the
surety and confirmed that if there is a substantial alteration, even if there be
no actual prejudice to the surety which can be shown to exist, the surety will
be discharged.

2. Discharge of Guarantor by Release of Principal Debtor:

Section 134 of the ICA provides that the guarantor shall stand discharged
from its liabilities under a contract of guarantee in case of any agreement
arrived at between the creditor and the principal debtor, by which the
principal debtor is released. Such release of principal debtor could be owing

74
Practical aspects related to the Insolvency and Bankruptcy Process

to any act or omission of the creditor, the legal consequence of which is the
discharge of the principal debtor. Simply put, if the principal debtor is
discharged of his liability to the creditor, the guarantor also stands
discharged.

3. Release of Principal Debtor by Creditor:

In terms of Section 135 of the ICA, if without the consent of the surety, the
creditor and debtor enter into a contract, whereby the creditor agrees to
make composition/compromise with or gives time to or agrees not to sue the
surety, in such a case, guarantor being the surety stands discharged by law
to fulfil his obligations under the contract of guarantee unless the surety
assents such contract. The Hon'ble Rajasthan High Court in the matter
of Ramswaroop and Anr. vs State Bank of Bikaner & Jaipur [2002 (3) WLN
430] held that:

"It is true that in each and every case of compromise surety cannot claim
discharge of the liability under the surety bond but when the creditor
accepted that the decree be passed against all the defendants and this
decree is to be satisfied by defendant No. 1 and when the creditor himself
agrees to accept entire decretal amount from only the borrower defendant,
then it amounts to voluntarily entering into new contract by the creditor with
the debtor. This new compromise (agreement), by necessary implication,
discharges the guarantor."

4. Remedy of Surety impaired by the act or omission of the Creditor:

Where the creditor either does something, which is inconsistent with the
rights of the surety or omits to do his duty towards the surety and because of
this, the eventual remedy of the surety that he had against the principal
debtor is impaired, the surety/guarantor is discharged from his liability
towards the creditor in accordance with section 139 of the ICA.

In the case of Jose Inacio Lourence vs Syndicate Bank and Another [1989 65
Comp Cas 698 Bom], the Hon'ble Bombay High Court held that "failure in not
registering the charge is also an act which is inconsistent with the rights of
surety within the meaning of Section 139, ICA and the eventual remedy
which the surety may have against the principal debtor is impaired resulting
in discharge of the surety."

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HB on Personal Guarantors to Corporate Debtors under IBC, 2016

5. Guarantee obtained by Misrepresentation:
In case where a guarantee has been obtained by means of
misrepresentation made by the creditor, or with his knowledge and consent,
concerning a material part of the transaction, such a guarantee is invalid. In
terms of Section 142 of ICA, any guarantee which has been obtained by
means of misrepresentation made by the creditor, or with his knowledge and
assent, concerning a material part of the transaction, is invalid.
6. Guarantee obtained by concealment:
One additional ground that can be taken by the guarantor is that the
guarantee was obtained by the creditor by means of keeping silence as to
certain material circumstances and in such circumstances the guarantee can
be challenged as invalid.
In the matter of Krishan Kumar vs. Syndicate bank & Ors. (RFA No. 1/1997
decided on February 19, 2009) before the Hon'ble Delhi High Court, it was
argued that the guarantor did not give any guarantee and had not signed any
document undertaking to pay any money to the bank in the event of
defendant no. 1 (principal borrower) failed to repay the same and the
guarantor contended forgery by the bank manager. The Hon'ble Delhi High
Court held that the finding of the trial court in holding the guarantor liable as
much as the principal borrower was erroneous in light of the fact that the
plaintiff bank had failed to prove the authenticity of the guarantee forming the
subject matter of the case.

76
Chapter 11

Frequently Asked Questions on
Insolvency and Bankruptcy Process
for Personal Guarantors to Corporate

Debtors under IBC

Q 1. What are the Regulations to deal with Personal Guarantors to
Corporate Debtors and from what date it is effective?

A 1. There are two Regulations to deal with Personal Guarantors to Corporate
Debtors, those are namely;

Insolvency and Bankruptcy Board of India (Insolvency Resolution
Process for Personal Guarantors to Corporate Debtors) Regulations,
2019

Insolvency and Bankruptcy Board of India (Bankruptcy Process for
Personal Guarantors to Corporate Debtors) Regulations, 2019

Both of the above two Regulations shall come into force from the 1st
day of December 2019.

Q 2. What is the meaning of Personal Guarantor?

A 2. As per Section 5(22) of IBC- “Personal Guarantor” means an individual
who is the surety in a contract of guarantee to a corporate debtor.

Q 3. What is the meaning of Guarantor?

A 3. As per Rule 3 (e) of The Insolvency and Bankruptcy (Application to
Adjudicating Authority for Insolvency Resolution Process for Personal
Guarantors to Corporate Debtors) Rules, 2019, “Guarantor” means a
debtor who is a personal guarantor to a corporate debtor and in respect of
whom guarantee has been invoked by the creditor and remains unpaid in
full or part.

Q 4. Define Corporate Guarantor

A 4. Section 5A of IBC, “Corporate Guarantor” means a corporate person who
is the surety in a contract of guarantee to a corporate debtor.
HB on Personal Guarantors to Corporate Debtors under IBC, 2016

Q 5. How Notice can be served?

A 5. As per Rule 3 (g) of Personal Guarantor, - “serve” means sending any
communication by any means, including registered post, speed post,
courier or electronic form, which is capable of producing or generating an
acknowledgement of receipt of such communication: Provided that where
a document cannot be served in any of the modes, it shall be affixed at
the outer door or some other conspicuous part of the house or building in
which the addressee ordinarily resides or carries on business or
personally works for gain;

Q 6. What is “Contract of Guarantee”?

A 6. As per Section 126. of Indian Contract Act - “Contract of Guarantee”,
“Surety”, “Principal Debtors” and “Creditors” — A “contract of
guarantee” is a contract to perform the promise, or discharge the liability,
of a third person in case of his default. The person who gives the
guarantee is called the “surety”; the person in respect of whose default the
guarantee is given is called the “principal debtor”, and the person to whom
the guarantee is given is called the “creditor”. A guarantee may be either
oral or written.

Q 7. How is “Invocation of Guarantee” carried out?

A 7. The Letter of Guarantee Agreement should be well stamped and
enforceable as per “The Indian Contract Act” and the Guarantee
agreement has been invoked as per sections 126 to 147 of the Indian
contract act, 1872. Usually, Guarantee should be invoked by servicing a
notice in writing to guarantor and CC to Principal Debtor/borrower.
Amount of Debt remains unpaid in full or part, should be mentioned in the
notice clearly.

Q 8. In case of Joint Guarantors/sureties, IBC proceedings may be
initiated against one or all?

A 8. In case of Joint Guarantors/sureties: As per the guarantee agreement.
IBC proceedings may be initiated against one or all – based on joint
and several liability.

Q 9. Does provisions of moratorium apply to a surety in a contract of
personal guarantee for corporate debtor?

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FAQ on Insolvency and Bankruptcy Process for PG to CD

A 9. Section 14(3) of the IBC (introduced vide 2018 amendment) which states
that provisions of moratorium shall not apply to a surety in a contract of
personal guarantee for corporate debtor, is retrospective.
Note: Above sections are applicable where Principal debtor is
corporate debtor and guarantor is individual.

Q 10. How application can be filed by creditor for initiation of Insolvency
against personal guarantor of Corporate Debtor under IBC?

A 10. As per Rule 7 of Insolvency Resolution Process for Personal
Guarantors to Corporate Debtors) Rules, 2019. :
(1) Prior to filing of application, the creditor must serve, a demand
notice under clause (b) of sub-section (4) of section 95, on the
guarantor demanding payment of the amount of default, in Form
B.
(2) The application under sub-section (1) of section 95 shall be
submitted in Form C, along with a fee of two thousand rupees.
(3) The creditor shall serve forthwith a copy of the application
referred to in sub-rule (2) to the guarantor and the corporate
debtor for whom the guarantor is a personal guarantor.
(4) In case of a joint application, the creditors may nominate one
amongst themselves to act on behalf of all the creditors.
Application can be filed only if the debt stated in the demand notice is
not repaid by the debtor within 14 days of service of the demand
notice.
Unlike demand notice in Form 3 of the IBBI (Application to
Adjudicating Authority) Rules, 2016, the demand notice in case of
personal insolvency does not give a chance of disputing the notice.

Q 11. What is the Difference between Personal Insolvency Resolution and
Bankruptcy?

A 11. Both (Personal Insolvency Resolution and Bankruptcy) are two different
thing, below table will help is understanding.

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HB on Personal Guarantors to Corporate Debtors under IBC, 2016

Key Basic Area of Personal Bankruptcy

Differences Insolvency

Resolution

Basic Conditions Default by the Rejection of
Corporate Debtor
Application for

Personal Insolvency

Resolution

OR

Rejection of

repayment plan.

Role of Resolution Appointed IP Appointed IP
Professional referred
“Resolution as referred as
Professional”
“Bankruptcy Trustee”

Vesting of Estate No Yes

Assets of the
bankrupt vest in the
hands of Bankruptcy
Trustee.

Moratorium Yes including Only Interim

Restrictions on Moratorium

Creditors commences on the

date of making

application.

Q 12. Who can initiate the case against Personal Guarantor to Corporate
Debtor

A 12. The Case can be initiated by Debtor as mentioned in section 122 of IBC
2016 or by Creditor as mentioned in section 123 of IBC 2016. Section 122
and 123 of IBC is reproduced as below.

122. Application by debtor. -

(1) The application for bankruptcy by the debtor shall be
accompanied by-

(a) the records of insolvency resolution process undertaken

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FAQ on Insolvency and Bankruptcy Process for PG to CD

under Chapter III of Part III;

(b) the statement of affairs of the debtor in such form and
manner as may be prescribed, on the date of the
application for bankruptcy; and

(c) a copy of the order passed by the Adjudicating Authority
under Chapter III of Part III permitting the debtor to apply
for bankruptcy.

(2) The debtor may propose an insolvency professional as the
bankruptcy trustee in the application for bankruptcy.

(3) The application referred to in sub-section (1) shall be in such
form and manner and accompanied by such fee as may be
prescribed.

(4) An application for bankruptcy by the debtor shall not be
withdrawn without the leave of the Adjudicating Authority.

123. Application by creditor. –

(1) The application for bankruptcy by the creditor shall be
accompanied by-

(a) the records of insolvency resolution process undertaken
under Chapter III;

(b) a copy of the order passed by the Adjudicating Authority
under Chapter III permitting the creditor to apply for
bankruptcy;

(c) details of the debts owed by the debtor to the creditor as
on the date of the application for bankruptcy; and

(d) such other information as may be prescribed.

(2) An application under sub-section (1) made in respect of a debt
which is secured, shall be accompanied with –

(a) a statement by the creditor having the right to enforce the
security that he shall, in the event of a bankruptcy order
being made, give up his security for the benefit of all the
creditors of the bankrupt; or

(b) a statement by the creditor stating–

(i) that the application for bankruptcy is only in respect

81
HB on Personal Guarantors to Corporate Debtors under IBC, 2016

of the unsecured part of the debt; and

(ii) an estimated value of the unsecured part of the
debt.

(3) If a secured creditor makes an application for bankruptcy and
submits a statement under clause (b) of sub-section (2), the
secured and unsecured parts of the debt shall be treated as
separate debts.

(4) The creditor may propose an insolvency professional as the
bankruptcy trustee in the application for bankruptcy.

(5) An application for bankruptcy under sub-section (1), in case of a
deceased debtor, may be filed against his legal representatives.

(6) The application for bankruptcy shall be in such form and manner
and accompanied by such fee as may be prescribed.

(7) An application for bankruptcy by the creditor shall not be
withdrawn without the permission of the Adjudicating Authority.

Q 13. Who is the Adjudicating Authority for filing application in the matter
of Personal Guarantor to Corporate Debtor?

A 13. The Adjudicating Authority is National Company Law Tribunal (“NCLT”),
for filing application against Personal Guarantor to Corporate Debtor.

Q 14. What is the Eligibility of Resolution Professional under Insolvency
Resolution Process for Personal Guarantors to Corporate Debtors?

A 14. Regulation 4 of Insolvency and Bankruptcy Board Of India (Insolvency
Resolution Process For Personal Guarantors To Corporate Debtors)
Regulations, 2019 defines the eligibility

Eligibility of resolution professional.

(1) An insolvency professional shall be eligible to be appointed as a
resolution professional for a resolution process, if-

(a) he, the insolvency professional entity of which he is a
partner or a director, and all the partners and directors of
the said insolvency professional entity are independent of
the guarantor;

(b) he is not subject to any ongoing disciplinary proceeding
or a restraint order of the Board or of the insolvency
professional agency of which he is a professional

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FAQ on Insolvency and Bankruptcy Process for PG to CD

member; and
(c) the insolvency professional entity of which he is a partner

or a director, or any other partner or director of such
insolvency professional entity does not represent any
party in the resolution process.

Explanation.- For the purposes of this sub-regulation, -

(i) a person shall be considered independent of the
guarantor, if he-

(a) is not an associate of the guarantor;

(b) is not a related party of the corporate debtor; and

(c) has not acted or is not acting as interim resolution
professional, resolution professional or liquidator in
respect of the corporate debtor;

(ii) the expression “related party” shall have the meaning
assigned to it in sub-section (24) of section 5.

Q 15. What is the Eligibility of Bankruptcy Trustee under Bankruptcy for
Personal Guarantors To Corporate Debtors?

A 15. Regulation 3 of Insolvency and Bankruptcy Board Of India (Bankruptcy
For Personal Guarantors To Corporate Debtors) Regulations, 2019
defines the eligibility

Eligibility of bankruptcy trustee.

(1) An insolvency professional shall be eligible to be appointed as a
bankruptcy trustee for a bankruptcy process, if-

(a) he, the insolvency professional entity of which he is a
partner or a director, and all the partners and directors of
the said insolvency professional entity are independent of
the guarantor;

(b) he is not subject to any ongoing disciplinary proceeding
or a restraint order of the Board or of the insolvency
professional agency of which he is a professional
member; and

(c) the insolvency professional entity of which he is a partner
or a director, or any other partner or director of such

83
HB on Personal Guarantors to Corporate Debtors under IBC, 2016

insolvency professional entity does not represent any
party in the bankruptcy process.
Explanation. - For the purposes of this sub-regulation, a person
shall be considered independent of the guarantor, if he-
(a) is not an associate of the guarantor;
(b) is not a related party of the corporate debtor; and
(c) has not acted or is not acting as interim resolution
professional, resolution professional or liquidator in
respect of the corporate debtor.
(2) A bankruptcy trustee, who has been an auditor of the guarantor
at any time during the preceding three years, shall make a
disclosure of remuneration received, year-wise for such audit, to
the committee.
Q 16. When is Letter of Guarantee / Guarantee Agreement obtained from
the guarantors?
A 16. Bankers generally obtain Letter of Guarantee/ Guarantee Agreement
from the guarantors at the time of sanction & Documentation / renewal of
Loan. The Letter of Guarantee Agreement, should be well stamped and
enforceable as per “The Indian Contract Act” and the Guarantee
agreement has been invoked as per sections 126 to 147 of the Indian
Contract Act.

84
Chapter 12

Case laws under Insolvency and
Bankruptcy Code, 2016 on Insolvency
and Bankruptcy Process for Personal

Guarantors to Corporate Debtors

Sr. Case Laws Date of Observation by the Court
No.
Order/Court

1. In The Matter of : NCLAT NEW 5. At this stage, it will be

Schweitzer DELHI desirable to refer to the

Systemtek India relevant portion of Section 60

Pvt. Ltd Company of the I&B Code, as quoted
..... Appellant
Appeal (AT) below: -

Vs. (Insolvency) No. "60. Adjudicating Authority for
Phoenix ARC 129 of 2017 corporate persons-
Pvt. Ltd. & Ors. (1) The. Adjudicating Authority,
…… Date of Order: in relation to insolvency
Respondents 09.08.2017 resolution and liquidation for
corporate persons including
corporate debtors and

personal guarantors thereof

shall be the National Company

Law Tribunal having territorial

jurisdiction over the place

where the registered office of

the corporate person is

located.

(2) Without prejudice to sub-

section (1) and

notwithstanding anything to the

contrary contained in this

Code, where a corporate

insolvency resolution process

or liquidation proceeding of a
HB on Personal Guarantors to Corporate Debtors under IBC, 2016

corporate debtor is pending
before a National Company
Law Tribunal, an application
relating to the insolvency
resolution or bankruptcy of a
personal guarantor of such

corporate debtor shall be filed
before such National Company

Law Tribunal.

(3) An insolvency resolution
process or bankruptcy
proceeding of a personal
guarantor of the corporate
debtor pending in any court or
tribunal shall stand transferred
to the Adjudicating Authority
dealing with insolvency

resolution process or
liquidation proceeding of such
corporate debtor.

2. Petitioner :- It has also been submitted that

Sanjeev Shriya Case :- WRIT – the entire proceeding before

C No. - 30285 of the DRT is completely without

Respondent :- 2017 jurisdiction precisely in the

State Bank Of backdrop that once the

India and 6 Connected with proceeding has already been
others Case :- WRIT - commenced under the IBC

C No. - 30033 of 2016 and the Moratorium
under Section 14 of IBC 2016
2017
has already been issued and

Date of Order: even the parties have put their
06.09.2017 appearance before the
Insolvency Professionals, then
the impugned proceedings
only against the guarantors of
a principal debtor are per se
bad specially in the present
situation where there is a legal

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Case laws under IBC, 2016 on Insolvency and BP for PG to CD

bar/moratorium against the

principal debtor imposed by

operation of law IBC 2016. The

NCLT has already ceased of

the process of insolvency

resolution against the

company (in liq.) under IBC

2016. Moreover, the SBI has

also put their appearance in

the said proceedings regarding

its claim, and by no stretch of

imagination the DRT could

adjudicate any claims of

alleged debt of the second

respondent and without

determination of debt the DRT

cannot proceed against the

guarantors. The SBI at no

point of time had disassociated

itself from the proceeding

before the NCLT but it is

actively participating in the

proceeding.

3. State Bank of SUPREME Section 14 refers only to debts

India … COURT OF due by corporate debtors, who

Appellant INDIA are limited liability companies,

Vs. CIVIL APPEAL and it is clear that in the vast
V. Ramakrishnan NO. 3595 OF majority of cases, personal
& Anr. … 2018 guarantees are given by
Respondents WITH CIVIL Directors who are in
APPEAL NO. management of the
4553 OF 2018 companies. The object of the
Code is not to allow such

Date of Order: guarantors to escape from an
14.08.2018 independent and coextensive
liability to pay off the entire

outstanding debt, which is why

Section 14 is not applied to

87
HB on Personal Guarantors to Corporate Debtors under IBC, 2016

them. However, insofar as

firms and individuals are

concerned, guarantees are

given in respect of individual

debts by persons who have

unlimited liability to pay them.

And such guarantors may be

complete strangers to the

debtor – often it could be a

personal friend. It is for this

reason that the moratorium

mentioned in Section 101

would cover such persons, as

such moratorium is in relation

to the debt and not the debtor.

4. In The Matter of : NCLAT NEW It was not the intention of the

Lalit Mishra & DELHI legislature to benefit the
‘Personal Guarantors’ by
Ors. …Appellants Company excluding exercise of legal
Appeal (AT) remedies available in law by
Vs (Insolvency) No. the creditors, to recover
164 of 2018 legitimate dues by enforcing
Sharon Bio the personal guarantees,
Date of Order: which are independent
Medicine Ltd. & 19.12.2018 contracts. It is a settled
position of law that the
Ors.

….Respondents

liabilities of guarantors is co-

extensive with the borrower.

This Appellate Tribunal held

that the resolution under the

‘I&B Code’ is not a recovery

suit. The object of the ‘I&B

Code’ is, inter alia,

maximization of the value of

the assets of the ‘Corporate

Debtor’, then to balance all the

creditors and make availability

of credit and for promotion of

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Case laws under IBC, 2016 on Insolvency and BP for PG to CD

entrepreneurship of the
‘Corporate Debtor’. While
considering the ‘Resolution
Plan’, the creditors focus on
resolution of the borrower
‘Corporate Debtor’, in line with

the spirit of the ‘I&B Code’.

5. In The Matter of : NCLAT NEW The provision of the I&B Code

Ferro Alloys DELHI do not bar a ‘financial creditor’

Corporation Ltd., from initiating ‘corporate

… Appellant Company insolvency resolution process’

Vs. Appeal (AT) against the ‘guarantor’, who
Rural (Insolvency) No. comes within the meaning of
Electrification 92 of 2017 ‘corporate debtor’. The
Corporation Ltd., aforesaid matter can be
… Respondent Date of Order: noticed from the statutory
08.01.2019 inter-se rights, obligations and
liabilities of :

(i) A surety qua the creditor

(the relationship as defined
under the Indian Contract Act);
or (ii) Guarantor qua financial
creditor.

6. In The Matter of : NCLAT-New There is no bar in the ‘I&B

Dr. Vishnu Kumar Delhi, Appeal Code’ for filing simultaneously

Agarwal No.:346/2018, two applications under Section

… Appellant 347/2018 7 against the ‘Principal
Vs. Date of Order: Borrower’ as well as
08.01.2019 the ‘Corporate Guarantor(s)’ or
M/s. Piramal against both the ‘Guarantors’.
Enterprises Ltd. However, once for same set of
… Respondent claim application under

Section 7 filed by the

‘Financial Creditor’ is admitted

against one of the ‘Corporate

Debtor’ (‘Principal Borrower’ or

‘Corporate Guarantor(s)’),

second application by the

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HB on Personal Guarantors to Corporate Debtors under IBC, 2016

same ‘Financial Creditor’ for

same set of claim and default

cannot be admitted against the

other ‘Corporate Debtor’ (the

‘Corporate Guarantor(s)’ or

the ‘Principal Borrower’).

Further, though there is a

provision to file

joint application under Section

7 by the ‘Financial Creditors’,

no application can be filed by

the ‘Financial Creditor’ against

two or more ‘Corporate

Debtors’ on the ground of joint

liability (‘Principal Borrower’

and one Corporate Guarantor’,

or ‘Principal Borrower’ or two

‘Corporate Guarantors’ or

one ‘Corporate Guarantor’ and

other ‘Corporate Guarantor’),

till it is shown that the

‘Corporate Debtors’ combined

are joint venture company.

7. In The Matter of : NCLAT-New NCLAT held that a contract of

Bijay Kumar Delhi, Appeal Guarantee is a contract to
Agarwal No.: CA(AT)(I)- perform the promise or
… Appellant 993/2019- discharge the liability of 3rd
NCLAT party, in case of his default. In

Vs. Date of Order: this connection, it is to be
State Bank of 23.01.2020 pointed out that it may not be
India and Anr necessary to start CIRP
… Respondents against the Principal Borrower
before initiating against the

Corporate Debtor. Even

without resorting to CIRP

against the Principal Borrower

it is always open to the

Financial Creditor to

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Case laws under IBC, 2016 on Insolvency and BP for PG to CD

commence CIRP u/s 7 of the
Code against the Corporate
Debtor / Guarantor. Further
NCLAT held that there is no
two opinion of a prime fact
that there is no fetter in the

Code for projecting

simultaneously two

applications u/s 7 of IBC

against (i) the Principal
Borrower as well as (ii) the
Corporate Guarantor(s) or
against both the Guarantors
but if, for the same set of
claim, when an Application
filed by the Financial Creditor
is admitted against one of the
Corporate Debtor/Principal
Borrower or Corporate
Guarantor, the second
application filed by the same
Financial Creditor for the same

set of claim and default is not
to be admitted against the
other Corporate Debtor (The

Corporate Guarantor(s) or the
Principal Borrower.

8. In The Matter of : NCLAT-New Once the matter is settled

State Bank of Delhi, Appeal Principal Borrower, the

India … Appellant No.:CA(AT)(I)- Guarantee, if any, given by

Vs. 1192/2019- one or other parties (such as
Adhunik Steels NCLAT
Ltd Date of Order: Corporate Debtor)
… Respondent 20.01.2020
automatically stands

extinguished

9. In The Matter of : NCLAT-New Once for same set of claim

M/s. SEW Delhi, Appeal and default application u/s 7
Infrastructure Ltd No.:CA(AT)(I)- against the Principal Borrower-

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HB on Personal Guarantors to Corporate Debtors under IBC, 2016

… Appellant 1500/2019- M/s. Amrit Jal Ventures Private
Vs. NCLAT Limited is admitted, the
Date of Order: application against the
M/s. Mahendra 09.01.2020 Corporate Guarantor is not
Investment maintainable. NCLAT not
Advisors Pvt. Ltd. inclined to interfere with the
… Respondent impugned order of rejection of
the application under Section 7

10. Lalit Kumar Jain IN THE It is held that the impugned

… Petitioner(s) SUPREME notification no. S.O. 4126(E)
COURT OF
Vs. INDIA dated 15.11.2019 (relate to
Transferred
Union of India & Case (Civil) No. personal guarantors to
245/2020
Ors. … corporate debtors) is legal and

Respondent (s) valid. The Hon’ble Court held

that the impugned

notification is not an instance

of legislative exercise, or

Date of Order: amounting to impermissible
and selective application of
21.05.2021
provisions of the Code. There

is no compulsion in the Code

that it should, at the same

time, be made applicable to all

individuals, (including personal

guarantors) or not at all. There

is sufficient indication in the

Code- by Section 2(e), Section

5(22), Section 60 and Section

179 indicating that personal

guarantors, though forming

part of the larger grouping of

individuals, were to be, in view

of their intrinsic connection

with corporate debtors, dealt

with differently, through the

same adjudicatory process and

by the same forum (though not

insolvency provisions) as such

corporate debtors. It is held

that the impugned notification

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Case laws under IBC, 2016 on Insolvency and BP for PG to CD

was issued within the power

granted by Parliament, and in

valid exercise of it. The

exercise of power in issuing

the impugned notification.

under Section 1(3) is

therefore, not ultra

vires; hence the notification is

valid.

It is also held that approval of

a resolution plan relating to a

corporate debtor does not

operate so as to discharge the

liabilities of personal

guarantors (to corporate

debtors.

93
Annexure

Forms under IBC, 2016 related to the
Insolvency and Bankruptcy Process
for Personal Guarantors to Corporate

Debtors

Insolvency and Bankruptcy (Application to Adjudicating Authority for
Insolvency Resolution Process for Personal Guarantors to Corporate
Debtors) Rules, 2019.”

FORM B
[See rule 7(1)]

FORM OF DEMAND NOTICE

[Under rule 7(1) of the Insolvency and Bankruptcy (Application to
Adjudicating Authority for Insolvency Resolution Process of Personal
Guarantors to Corporate Debtors) Rules, 2019]

[Date]

To

[Name and address of the guarantor]

From

[Name and address of the creditor]

Subject: Demand notice in respect of unpaid debt in default due from
[corporate debtor] under the Code.

Madam/Sir,

1. This letter is a demand notice of unpaid debt in default due from [name of
corporate debtor].

2. Please find particulars of the unpaid debt in default below:

PARTICULARS OF DEBT
1. Total outstanding debt (including any interest or

penalties)
Annexure

2. Amount of debt in default
3. Date when the debt was due
4. Date when the default occurred
5. Nature of the debt
6. Secured debt including particulars of security held, the

date of its creation, its estimated value as per the
creditor (as applicable), and details of securities
7. Unsecured debt (as applicable)

8. Details of retention of title arrangements (if any) in
respect of goods to which the debt refers (attach a copy)

9. Particulars of an order of a court, tribunal or arbitral
panel adjudicating on the default, if any (attach a copy of
the order)

10. Record of default with the information utility, if any
(attach a copy)

11. Details of succession certificate, or probate of a WILL, or
letter of administration, or court decree (as may be
applicable), under the Indian Succession Act, 1925 (10
of 1925)
(attach a copy)

12. Provision of law, contract or other document under which
debt has become due (attach a copy)

13. A statement of bank account where deposits are made
or credits received normally by the creditor in respect of
the debt of the corporate debtor, from the date on which
the debt was incurred

14. List of documents attached to this notice in order to
prove the existence of debt and the amount in default

3. If you believe that the debt has been repaid before the receipt of this
notice, please demonstrate such repayment by sending to us, within
fourteen days of receipt of this notice, the following:--

(a) an attested copy of the record of electronic transfer of the unpaid amount
from the bank account of the guarantor; or

(b) evidence of encashment of cheque for the unpaid amount issued by the
guarantor; or

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HB on Personal Guarantors to Corporate Debtors under IBC, 2016

(c) an attested copy of any record that [name of the creditor] has received the
payment.

4. The undersigned request you to unconditionally pay the unpaid debt in
default in full within fourteen days from the receipt of this letter failing
which insolvency resolution process, under the Code, shall be initiated
against you.
Yours sincerely,

Signature of creditor/person authorized to act on behalf of the creditor
[Please enclose the authorization document if this notice is being issued
on behalf of the creditor]
Name in block letters
Address of person signing
Instructions
1. Please serve a copy of this notice on the guarantor, fourteen days in

advance of filing an application under section 95 of the Code.
2. Please attach a copy of such served notice with the application made by

the creditor to the Adjudicating Authority.

96
Annexure

FORM C
[See rule 7(2)]

APPLICATION BY CREDITOR TO INITIATE INSOLVENCY RESOLUTION
PROCESS

[Under rule 7(2) of the Insolvency and Bankruptcy (Application to
Adjudicating Authority for Insolvency Resolution Process for Personal
Guarantors to Corporate Debtors) Rules, 2019]

[Date]

To

The Adjudicating Authority

[Address]

From

[Name and address of the creditor]

In the matter of [name of the guarantor]

Subject: Application to initiate insolvency resolution process in respect
of [name of the guarantor] under the Code.

Madam/Sir,

[Name of the creditor], hereby submits this application to initiate an
insolvency resolution process in the case of [name of guarantor].

The details for the purpose of this application are set out below:

Part – I

PARTICULARS OF APPLICANT

1. Title and full name

2. Date of birth and e-mail
address

3. Contact number(s) Home Mobile Business

4. Identification number Aadhaar CIN PAN GSTIN
number

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HB on Personal Guarantors to Corporate Debtors under IBC, 2016

5. Address Present Permanent Business

6. Bank Account details Account IFSC Code Name of the Bank and

(Joint and Several) number Branch Address

Part – II

PARTICULARS OF THE GUARANTOR

1. Title and full name

2. Date of birth and e-mail address (to
the extent known)

3. Any other name by which the
guarantor is or has been known (as
applicable) (to the extent known)

4. Address Present Perma Business
nent

5. Occupation/ Business/ Profession

6. Annual income (to the extent known)

7. List of associates of the guarantor, Name Age Address
including relatives, who may be
creditors (to the extent known) IFSC Name of
Code the bank
8. Bank account details (Joint and Account
and Branch
Several) number address

9. Identification number Aadhaar Passp PAN GSTI
number
ort N

numb

er

98
10. Contact number(s) Home Annexure

Mobile Business

11. List of assets of guarantor as on the Immovable Descri Esti Exclu
application date (to the extent known) ption mate ded

Note: this will include all assets of d asset
guarantor, irrespective of them being valu or
excluded assets. e not

Movable Descri Esti Exclu
ption mate ded

d asset
valu or
e not

Vehicles

Shares in
listed
companies

Shares in
other
companies

Life insurance
policy

Jewellery

Pension
policy

Investment in
mutual funds

Investment in
other funds

Investment in
partnerships
and

99
HB on Personal Guarantors to Corporate Debtors under IBC, 2016

other
business
concerns

Any other
movable
property

12. Number of directorships held in the
preceding three years (along with
name of company in which
directorship is held) and CIN of such
companies

13. Marital status (single, married,
divorced, widowed, co-habiting,
separated, or specify any other) (to
the extent known)

14. Details regarding personal guarantor (in addition to information in serial
numbers 1-13 of this part) -

Name of corporate debtor for which
guarantee is given

Any current or past position held in
the corporate debtor (to the extent
known)

Identification number of the corporate
debtor

Whether corporate debtor is an
associate (to the extent known)

Any securities held in corporate
debtor for whom guarantee is given

15. Where the guarantor is not resident in
India, the name and address of
person resident in India authorized to
accept the service of process on
guarantor’s behalf

100
Annexure

Part-III

PARTICULARS OF DEBT

1. Total debt (including any interest or
penalties)

2. Amount in default

3. Date on which debt was due

4. Date on which default occurred

5. Nature of the debt

6. Secured debt including particulars of
security held, the date of its creation, its
estimated value as per the creditor (as
applicable)

7. Unsecured debt (as applicable)

8. Details of retention of title arrangements
(if any) in respect of goods to which the
debt refers (attach a copy)

9. Details of any mutual credit, mutual debts,
or other mutual dealings between the
guarantor and the creditor, which may be
set-off against the claim (attach proof)

10. Particulars of an order of a court, tribunal
or arbitral panel adjudicating on the
default, if any (attach a copy of the order)

11. Record of default with the information
utility, if any (attach a copy)

12. Details of succession certificate, or
probate of a will, or letter of
administration, or court decree (as may
be applicable), under the Indian
Succession Act, 1925 (10 of 1925) (attach
a copy)

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HB on Personal Guarantors to Corporate Debtors under IBC, 2016

13. Provision of law, contract or other
document under which debt has become
due (attach a copy)

14. A statement of bank account where
deposits are made or credits received
normally by the creditor in respect of the
debt of the corporate debtor, from the
date on which the debt was incurred
(attach a copy)

15. List of documents attached to this
application in order to prove the existence
of debt and the amount in default

16. Statement by creditor in respect of I [creditor] hereby state that

excluded debts the debt(s) for which the

insolvency resolution process

application is filed does not

include any-

(i) liability to pay fine
imposed by a court or
tribunal;

(ii) liability to pay damages
for negligence, nuisance
or breach of a statutory,
contractual or other
legal obligation;

(iii) liability to pay
maintenance to any
person under any law
for the time being in
force;

(iv) liability in relation to a
student loan;

(v) any other debt
prescribed under section
79(15)(e) of the Code.

102
Annexure

17. If you are a secured creditor, tick the □ I agree to forfeit my right
to enforce my security
applicable box in the right column relating [insert description] during
the period of the
to forfeiture of right to enforce security repayment plan.

during the period of the repayment plan,

which will determine the voting share as

per section 110 of the Code □ I do not agree to forfeit

my right to enforce my

security [insert

description] during the

period of the repayment

plan.

Part-IV

PARTICULARS OF & DECLARATION BY INSOLVENCY PROFESSIONAL
(IF APPLICATION FILED THROUGH INSOLVENCY PROFESSIONAL)

1. Title and full
name

2. Address Present Permanent Business

3. E-mail
address(es)

4. Contact Home Mobile Business
number

5. Declaration I, [name of insolvency professional], an insolvency
by Insolvency professional enrolled with [name of insolvency
Professional profebsysiionnsaollveangceynpcryo]feshsaiovninagl registration number
[registration number.] have been proposed as the
resolution professional by [name of applicant
guarantor] in connection with the proposed insolvency
resolution process of [name of the guarantor].

I hereby:

(i) agree to accept appointment as the resolution
professional if an order of appointment is passed

103
HB on Personal Guarantors to Corporate Debtors under IBC, 2016

by the Adjudicating Authority;
(ii) state that the registration number allotted to me by

the Board is [insert registration number] and that I
am currently qualified to practice as an insolvency
professional;
(iii) disclose that I am currently serving as an interim
resolution professional / resolution professional /
authorized representative / liquidator/ bankruptcy
trustee in [insert number and details of the
proceedings];
(iv) certify that there are no disciplinary proceedings
pending against me with the Board or [name of the
insolvency professional agency he is a member of];
(v) affirm that I am eligible to be appointed as a
resolution professional in respect of the guarantor
in accordance with the Insolvency and Bankruptcy
Board of India (Insolvency Resolution Process for
Personal Guarantors to Corporate Debtors)
Regulations, 2019;
(vi) make the following disclosures in accordance with
the code of conduct for insolvency professionals as
set out in the Insolvency and Bankruptcy Board of
India (Insolvency Professionals) Regulations, 2016
[insert disclosures, if any]. (Signature of the
insolvency professional)
[Name of the creditor] has paid the requisite fee for this application through
[state means of payment] on [date].

Yours sincerely,

Signature of creditor/ person authorized to act on behalf of the creditor
[Please enclose the authorization document if this application is being
submitted on behalf of the creditor]

Name in block letters

Address of person signing

104
Annexure

List of documents to be attached to the application:

1) All documents mentioned in serial number. 15 of Part III of this form.
2) Copy of the demand notice served on the guarantor in Form B.
3) Copy of the income tax returns with detailed computation of the income of

the guarantor, or the firm, as the case may be, for the previous three
years, if available.
4) Copy of the personal guarantee contract.
5) Copy of the authorisation, wherever required under this form.
6) Proof that the application fee has been paid.
7) Documents evidencing the debt and the default in relation to the debt, as
may have been provided by the guarantor at any point in time, if available.
8) Documents evidencing the assets, liabilities, income and any other
relevant information as may have been provided by the guarantor at any
point in time, if available.
9) Documentary evidence of all information sought in each entry for each
Part of the form.

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HB on Personal Guarantors to Corporate Debtors under IBC, 2016

FORM D
[See rule 11(2)]
APPLICATION FOR WITHDRAWAL OF INSOLVENCY RESOLUTION
PROCESS
[Under rule 11 (2) of the Insolvency and Bankruptcy (Application to
Adjudicating Authority for Insolvency Resolution Process for Personal
Guarantors) Rules, 2019]

[Date]
To
The Adjudicating Authority
[Address]
From
[Name and address of the applicant]
In the matter of [name of the guarantor]
Subject: Withdrawal of application for insolvency resolution process of
[name of guarantor] admitted on …….
1. [Name of applicant], had filed an application bearing [particulars of

application, i.e, diary number/ case number] on [date of filing] before the
Adjudicating Authority under [Section 94/ Section 95] of the Code. The
said application was admitted by the Adjudicating Authority on [date]
bearing [case number].
2. I hereby withdraw the application bearing [particulars of application i.e,
diary number/ case number] filed by [name of applicant] before the
Adjudicating Authority under [Section 94/ Section 95] of the Code.
3. The creditor(s) have approved the request for withdrawal of the
application under rule 11.
4. I have been authorised by the applicant to file this application of
withdrawal with the Adjudicating Authority. (Strike out if not applicable)
5. The required bank guarantee towards estimated cost incurred in the
process by the resolution professional is attached.

(Signature of the applicant or person authorised by the applicant)
Date:
Place:

106
Annexure

Extract of the Insolvency and Bankruptcy (Application to Adjudicating
Authority for Bankruptcy Process for Personal Guarantors to Corporate
Debtors) Rules, 2019:

FORM B
[See rule 7(1)]

APPLICATION BY CREDITOR TO INITIATE BANKRUPTCY PROCESS

[Under rule 7 of the Insolvency and Bankruptcy (Application to Adjudicating
Authority for Bankruptcy Process for Personal Guarantors to Corporate
Debtors) Rules, 2019]

[Date]………….

To,

The Adjudicating Authority

[Address]

From,

[Name and address of the creditor]

In the matter of [name of the guarantor]

Subject: Application to initiate bankruptcy process in respect of [name of the
guarantor] under the Insolvency and Bankruptcy Code, 2016.

Madam/Sir,

[Name of the creditor], hereby submits this application to initiate a bankruptcy
process in the case of [name of guarantor]. The details for the purpose of this
application are set out below:

Part - I

PARTICULARS OF APPLICANT

1. Title and full name

2. Date of birth and e-mail
address

3. Contact number(s) Home Mobile Business

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HB on Personal Guarantors to Corporate Debtors under IBC, 2016

4. Identification number of Aadhaar CIN PAN GSTIN

creditor number

5. Address Present Permanent Business

Part – II

PARTICULARS OF THE GUARANTOR

1. Title and full name

2. Date of birth and e-mail
address (to the extent
known)

3. Any other name by which
the guarantor is or has
been known (as
applicable) (to the extent
known)

4. Address Present Permanent Business

5. Occupation/Business/
Profession

6. Annual income (to the
extent known)

7. List of associates of the Name Age Address
IFSC code
guarantor, including Name of the
Bank and
relatives, who may be Branch
address
creditors (to the extent

known)

8. Bank account details Account

(Joint and Several) number

108
9. Identification numbers Aadhaar Passport PAN Annexure
number number
GSTIN

10. Contact number(s) Home Mobile Business

11. List of assets of Immovable Description Estimated Excluded
value asset or
guarantor as on the not

application date (to the Description Estimated Excluded
value asset or
extent known) Movable not

Note: this will include all

assets of debtor,

irrespective of them

being excluded assets.

Vehicles

Shares in
listed

companies

Shares in
other

companies

Life insurance
policy

Jewelry

Pension
policy

Investment in
mutual funds

Investment in
other funds

Investment
in

partnerships
and other
business
concerns,

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HB on Personal Guarantors to Corporate Debtors under IBC, 2016

Any other
movable
property

12. Number of directorships
held in the last three
years (along with name of
company in which
directorship is held and
Director Identification
Number) and CIN of such
companies (to the extent
known)

13. Marital status (single,

married, divorced,

widowed, co-habiting,

separated, or specify

any other) (to the extent

known)

14. Details regarding guarantee given by guarantor (in addition to
information in serial numbers 1-13 of this part)-

Name of corporate debtor
for which guarantee is
given

Any current or past
position held in the
corporate debtor (to the
extent known)

Identification number of
the corporate debtor

Whether corporate debtor
is an associate (to the
extent known)

Any securities held in
corporate debtor for
whom guarantee is given

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Annexure

15. Where the guarantor is
not a resident in India,
the name and address of
the person authorised to
accept the service of
process on guarantor’s
behalf, along with the
authority

Part-III

PARTICULARS OF DEBT

1. Total debt (including any interest
or penalties)

2. Amount in default

3. Date on which debt was due

4. Date on which default occurred

5. Nature of the debt

6. Secured debt including particulars
of security held, the date of its
creation, its estimated value as per
the creditor (as applicable)

7. Unsecured debt (as applicable)

8. Details of retention of title
arrangements (if any) in respect of
goods to which the debt refers
(attach a copy)

9. Details of any mutual credit,
mutual debts, or other mutual
dealings between the guarantor
and the creditor, which may be
set-off against the claim (attach
proof)

10. Particulars of an order of a court,
tribunal or arbitral panel

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HB on Personal Guarantors to Corporate Debtors under IBC, 2016

adjudicating on the default, if any
(attach a copy of the order)

11. Record of default with the
information utility, if any (attach a
copy)

12. Details of succession certificate, or
probate of a will, or letter of
administration, or court decree (as
may be applicable), under the
Indian Succession Act, 1925 (10 of
1925) (attach a copy)

13. Provision of law, contract or other
document under which debt has
become due (attach a copy)

14. A statement of bank account
where deposits are made or
credits received normally by the
creditor in respect of the debt of
the debtor (attach a copy)

15. List of documents attached to this
notice in order to prove the
existence of debt and the amount
in default

16. Statement by the secured creditor Tick whichever is applicable-
under section 123(2) of the Code □ In the event a bankruptcy
order accepting the application
is passed by the Adjudicating
Authority, I shall relinquish my
security mentioned in serial
number 6 for the benefit of all
the creditors of the debtor.
□ The application is only in
respect of unsecured debt as
per the details mentioned in
serial number 7.

112
Annexure

17. Statement by creditor in respect of I [creditor] hereby state that the

excluded debts debt(s) for which the bankruptcy

process application is filed does

not include any-

(i) liability to pay fine imposed by
a court or tribunal;

(ii) liability to pay damages for
negligence, nuisance or
breach of a statutory,

contractual or other legal
obligation;

(iii) liability to pay maintenance to
any person under any law for
the time being in force;

(iv) liability in relation to a student
loan;

(v) any other debt prescribed
under section 79(15)(e) of the

code.

Part-IV

PARTICULARS OF & DECLARATION BY INSOLVENCY PROFESSIONAL
(IF PROPOSED TO ACT AS BANKRUPTCY TRUSTEE)

1. Title and full name

2. Address Present Permanent Business

3. E-mail address(es) Home Mobile Business
4. Contact number

5. Declaration by I, [name of insolvency professional], an insolvency
insolvency professional registered with [name of insolvency
professional professional agency] having registration number
[registration number] have been proposed as the
insolvency professional by [name of applicant
guarantor] in connection with the proposed

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HB on Personal Guarantors to Corporate Debtors under IBC, 2016

bankruptcy process of [name of the guarantor].
I hereby:
(i) agree to accept appointment as the

insolvency professional if an order of
appointment is passed by the Adjudicating
Authority;
(ii) state that the registration number allotted to
me by the Board is [insert registration
number] and that I am currently qualified to
practice as an insolvency professional;
(iii) disclose that I am currently serving as an
insolvency professional / resolution
professional / liquidator/ bankruptcy trustee in
[insert number and details of the
proceedings];
(iv) certify that there are no disciplinary
proceedings pending against me with the
Board or [name of the insolvency professional
agency he is a member of];
(v) affirm that I am eligible to be appointed as an
insolvency professional in respect of the
debtor in accordance with regulation 3 of the
Insolvency and Bankruptcy Board of India
(Bankruptcy Process for Personal Guarantors
to Corporate Debtors) Regulations, 2019;
(vi) make the following disclosures in accordance
with the code of conduct for insolvency
professionals as set out in the Insolvency and
Bankruptcy Board of India (Insolvency
Professionals) Regulations, 2016 [insert
disclosures, if any].

(Signature of the insolvency professional)

Yours sincerely,

114
Annexure

Signature of creditor/ person authorised to act on behalf of the creditor
[Please enclose the authorisation document if this application is being
submitted on behalf of the creditor]
Name in block letters
Address of person signing

List of documents to be attached to the application:
1) All records of the insolvency resolution process in respect of the

guarantor, including the following-
(i) Application for the insolvency resolution process;
(ii) Order(s) of the Adjudicating Authority-

a. accepting / rejecting the application under serial number (i)
above, as the case may be;

b. approving / rejecting the repayment plan, as the case may be;
c. entitling the creditor to apply for bankruptcy;
(iii) any other order that may have been passed by the Adjudicating
Authority in relation to the insolvency resolution process.
2) All documents mentioned in serial number 15 of Part III of this form.
3) Copy of the income tax returns with detailed computation of the income of
the guarantor, or the firm, as the case may be, for the previous three
years, if available.
4) Copy of the personal guarantee contract.
5) Copy of the authorisation, wherever required under this form.
6) Proof that the application fee has been paid.
7) Documents evidencing the debt and the default in relation to the debt, as
may have been provided by the guarantor at any point in time, if available.
8) Documents evidencing the assets, liabilities, income and any other
relevant information as may have been provided by the guarantor at any
point in time, if available.
9) Documentary evidence of all information sought in each entry for each
part of the form.

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HB on Personal Guarantors to Corporate Debtors under IBC, 2016

FORM C
[See rule 9 (1)]
Public Notice
[Under rule 9(1) of the Insolvency and Bankruptcy (Application to
Adjudicating Authority for Bankruptcy Process for Personal Guarantors to
Corporate Debtors) Rules, 2019]
FOR THE ATTENTION OF THE CREDITORS OF [Full Name and title of
Bankrupt (personal guarantor of (name of corporate debtor)]
Notice is hereby given that the [Debt Recovery Tribunal/National Company
Law Tribunal in case of bankrupt under section 60 of the Code] has ordered
the commencement of a bankruptcy process against the [name of bankrupt]
residing at [last known address of the bankrupt] on [bankruptcy
commencement date].
The creditors of [name of the bankrupt], are hereby called upon to submit
their claims with proof on or before [insert the date falling seven days from
date of issue of public notice] to the bankruptcy trustee at [address].
The last date for submission of claims of creditors shall be [date]. The
creditors may submit their claims through electronic means, or by hand or
registered post or speed post or courier.
Additional details of the bankruptcy trustee: [Name, last known address, e-
mail address, phone number and the registration number of the bankruptcy
trustee]
Note: Submission of false or misleading claims with proof shall attract
penalties or imprisonment in accordance with the provisions of the
Insolvency and Bankruptcy Code, 2016 and any other applicable laws.
Date and Place:

116
Annexure

FORM F
[See rule 12(1)]

CLAIM WITH PROOF BY A CREDITOR

[Under rule 12 of the Insolvency and Bankruptcy (Application to Adjudicating
Authority for Bankruptcy Process for Personal Guarantors to Corporate
Debtors) Rules, 2019]

[Date]

To

The Bankruptcy Trustee

[Name of the Bankruptcy Trustee]

[Address as set out in public notice]

From

[Name and address of the creditor]

Subject: Submission of claims with proof.

Madam/Sir,

[Name of the creditor], hereby submits this proof of claim in respect of the
bankruptcy process in the case of [name of bankrupt]. The details for the
same are set out below:

S. Particulars

No.

1. Title and full name of creditor

2. Identification number of creditor Aadhar PAN CIN GSTIN

3. Address Present Permanent Business

4. Total amount of claim
(Including any interest as at the
bankruptcy commencement
date)

5. Details of documents by
reference to which the debt can
be substantiated.

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HB on Personal Guarantors to Corporate Debtors under IBC, 2016

6. Details of any dispute as well
as the record of such dispute
Note: ‘Dispute’ will include
suits, arbitration proceedings,
and other judicial proceedings
contesting the existence or
validity of the debt.

7. Details of how debt was
incurred and the date when
debt incurred

8. Details of any mutual credit,
mutual debts, or other mutual
dealings between the bankrupt
and the creditor which may be
set-off against the claim

9. Details of any retention of title
arrangements in respect of
goods or properties to which
the claim refers

10. Details of the bank account to
which the amount of the claim
or any part thereof can be
transferred pursuant to a
repayment plan

11. Details of any security held
(including value and date when
it was given)

12. For secured creditors only

Tick whichever is applicable –
□ security interest is being
enforced
□ Security interest is being
relinquished.

If security is being relinquished, I, [name of secured creditor], hereby
please complete the statement release and relinquish my security
of relinquishment of security interest and any claim, right, lien or

118
Annexure

interest in the column on the interest in any property based on such

right. security interest, other than the right

to receive dividends as per the Code,

in [insert description of the subject

and nature of security interest], which

was created by [name of bankrupt],

on [insert date of creation of security

interest] on account of [insert
description of circumstances leading

to creation of security interest].

Signature of the secured creditor, or
the authorised signatory.

If security is being realised,
provide details of any action
that has been taken to enforce /
realise the security

If security is being realised,
specify balance amount of debt
which is being claimed.

13. List of documents attached to
this proof of claim in order to
prove the existence and non-
payment of claim due to the
creditor

14. Details of bank account to
which the share of creditor’s
proceeds from bankruptcy can
be deposited.

Signature of creditor or person
authorized to act on his behalf

[Please enclose the authority if this
is being submitted on behalf of a
creditor]

Name in block letters

Address of person signing

119
HB on Personal Guarantors to Corporate Debtors under IBC, 2016

DECLARATION

I, [name of claimant], currently residing at [insert address], declare and state
as follows:

1) [Name of bankrupt], the debtor was, at the bankruptcy commencement
date, being the day of_________20___, justly and truly indebted to me to
the sum of INR [insert amount of claim].

2) In respect of my claim of the said sum or any part thereof, I have relied on
the documents specified below:

[Please list the documents relied on as evidence of claim]

3) The said documents are true, valid and genuine to the best of my
knowledge, information and belief.

4) In respect of the said sum or any part thereof, I have not, nor has any
person by my order, to my knowledge or belief, for my use, had or
received any manner of satisfaction or security whatsoever, save and
except the following:

[Please state details of any mutual credit, mutual debts, or other mutual
dealings between the bankrupt and the creditor which may be set-off
against the claim.]

Date:

Place:

(Signature of the claimant)

VERIFICATION

I, [Name], the claimant hereinabove, do hereby verify that the contents of this
claim with proof are true and correct to my knowledge and belief and no
material facts have been concealed therefrom.

Verified at on this day of 201

(Claimant's signature)

120
Annexure

INSOLVENCY AND BANKRUPTCY BOARD OF INDIA (INSOLVENCY
RESOLUTION PROCESS FOR PERSONAL GUARANTORS TO CORPORATE
DEBTORS) REGULATIONS, 2019:

FORM A
WRITTEN CONSENT TO ACT AS RESOLUTION PROFESSIONAL

(Under regulation 4(2) of the Insolvency and Bankruptcy Board of India
(Insolvency Resolution Process for Personal Guarantors to Corporate
Debtors) Regulations, 2019)

[Date]

To
The Adjudicating Authority
[Name of Bench]

From
[Name of the Insolvency Professional]
[Registration number of the Insolvency Professional]

[Address of the Insolvency Professional registered with the Board]

Subject: Written consent to act as resolution professional in the matter of
[name of guarantor].

1. I, [name], an insolvency professional enrolled with [name of insolvency
professional agency] and registered with the Board, note that I have been
proposed to be appointed as resolution professional for the resolution
process of [name of the guarantor].

2. In accordance with regulation 4(2) of the Insolvency and Bankruptcy
Board of India (Insolvency Resolution Process for Personal Guarantors to
Corporate Debtors) Regulations, 2019, I hereby give consent to the
proposed appointment for the resolution process of [name of the
guarantor]

3. I declare and affirm as under: -

(a) I am registered with the Board as an insolvency professional.

(b) I am not subject to any disciplinary proceedings initiated by the
Board or the insolvency professional agency.

(c) I do not suffer from any disability to act as a resolution professional.

(d) I am eligible to be appointed as resolution professional of the
guarantor under regulation 3 of the Insolvency and Bankruptcy

121
HB on Personal Guarantors to Corporate Debtors under IBC, 2016

Board of India (Insolvency Resolution Process for Personal
Guarantors to Corporate Debtors) Regulations, 2019 and other
applicable provisions of the Code and regulations.

(e) I shall make the disclosures in accordance with the code of conduct
(f) for insolvency professionals as set out in the Insolvency and
Bankruptcy Board of India (Insolvency Professionals) Regulations,
Date: 2016.
Place:
I am having the following processes in hand:

Sl. Role as No. of processes on

No. the date of consent

1 Interim Resolution Professional

2 Resolution Professional of:

(a) Corporate debtors

(b) Personal guarantors,

individuals or partnership

firms

3 Liquidator of:

(a) Liquidation Process

(b) Voluntary Liquidation Process

4 Bankruptcy Trustee

5 Authorised Representative

6 Any other (please state)

(Signature of Insolvency Professional)
Registration No.…..

122
Annexure

FORM B
CLAIM WITH PROOF BY A CREDITOR
(Under regulation 7(1) of the Insolvency and Bankruptcy Board of India
(Insolvency Resolution Process for Personal Guarantors to Corporate
Debtors) Regulations, 2019)

[Date]
To
[Name of the Resolution Professional]
[Address as set out in public announcement]
From
[Name and address of the creditor]

Subject: Submission of claim with proof in the matter of [name of guarantor].

Madam/Sir,

[Name of the creditor], hereby submits the claim with proof in respect of the
resolution process of [name of guarantor]. The details for the same are set
out below:

1. Title and full name of creditor Aadhar PAN CIN GSTIN
2. Identification number of creditor Number

3. Address Present Permanent Business

4. Email

5. Total amount of claim
(Including any interest as on the
resolution process commencement
date)

6. Details of documents by reference
to which the debt is substantiated

123
HB on Personal Guarantors to Corporate Debtors under IBC, 2016

7. Details of any dispute, as well as
the record of such dispute with
respect to claim (if any)

8. Details of how debt was incurred
and the date when such debt was
incurred

9. Details of any mutual credit, mutual
debts, or other mutual dealings
between the guarantor and the
creditor, which may be set-off
against the claim

10. Details of any retention of title
arrangements in respect of goods
or properties to which the claim
refers

11. Details of the bank account to
which the amount of the claim or
any part thereof can be transferred
pursuant to a repayment plan
(Account Number, IFS Code,
Branch and Bank)

12. Details of any security held
(including value and date when it
was given)

13. If you are a secured creditor, tick □ I agree to forfeit my right to

the applicable box in the right enforce my security [insert

column relating to forfeiture of right description] during the period of

to enforce security during the the repayment plan.

period of the repayment plan, which □ I do not agree to forfeit my right

will determine the voting share as to enforce my security [insert

per section 110 of the Code description] during the period of

the repayment plan.

14. (i) Amount claimed by me in the
corporate insolvency resolution
process / liquidation process of

124
Annexure

the corporate debtor
(ii) The amount admitted by the

resolution professional /
liquidator of said process.
(iii) Amount realised by me in the
said process, if any
15. Following information regarding the
guarantor (to the extent known)-
Assets of the guarantor
Business of the guarantor
Firms in which guarantor is a
partner
Bank account details of the
guarantor
Name, age and address of spouse,
children, parents and siblings of
the guarantor
Signature of creditor or person authorised to act on his behalf
[Please enclose the authorisation document if this form is being submitted
on behalf of a creditor]
Name in block letters
Address of person signing

DECLARATION

I, [name of creditor], currently residing at [insert address], hereby declare
and state as follows:-

1. [Name of guarantor], the guarantor was, at the resolution process
commencement date, being the [date] of [year], indebted to me to the sum
of Rs. [insert amount of claim].

2. In respect of my claim of the said sum or any part thereof, I have relied on
the following documents:

(a)

(b)

125
HB on Personal Guarantors to Corporate Debtors under IBC, 2016

(c)

(d)

3. The aforesaid documents are true, valid and genuine to the best of my
knowledge, information and belief.

4. In respect of the said sum or any part thereof, I have not, nor has any
person by my order, to my knowledge or belief, for my use, had or
received any manner of satisfaction or security whatsoever, save and
except the following-

[Please state details of any mutual credit, mutual debts, or other mutual
dealings between the guarantor and the creditor which may be set-off against
the claim.]

Date:
Place:

(Signature of the creditor)

VERIFICATION

I, [Name of creditor] the creditor hereinabove, do hereby verify that the
contents of this proof of claim are true and correct to the best of my
knowledge and belief and that no material facts have been concealed
therefrom.

Verified at ………………… on this ………………… day of ……… 20__

(Signature of the creditor)

126
Annexure

INSOLVENCY AND BANKRUPTCY BOARD OF INDIA (BANKRUPTCY
PROCESS FOR PERSONAL GUARANTORS TO CORPORATE DEBTORS)
REGULATIONS, 2019:

FORM A
WRITTEN CONSENT TO ACT AS BANKRUPTCY TRUSTEE

(Under regulation 3(3) of the Insolvency and Bankruptcy Board of India
(Bankruptcy Process for Personal Guarantors to Corporate Debtors)
Regulations, 2019)

[Date]

To
The Adjudicating Authority
[Name of Bench]

From

[Name of the Insolvency Professional]

[Registration number of the Insolvency Professional]

[Address of the Insolvency Professional registered with the Board]

Subject: Written consent to act as bankruptcy trustee.

1) I, [name], an insolvency professional enrolled with [name of insolvency
professional agency] and registered with the Board, note that I have been
proposed to be appointed as bankruptcy trustee for the bankruptcy
process of [name of the bankrupt].

2) In accordance with regulation 3(3) of the Insolvency and Bankruptcy
Board of India (Bankruptcy Process for Personal Guarantors to Corporate
Debtors) Regulations, 2019, I hereby give consent to the proposed
appointment.

3) I declare and affirm as under: -

(a) I am registered with the Board as an insolvency professional.

(b) I am not subject to any disciplinary proceedings initiated by the
Board or the Insolvency Professional Agency.

(c) I do not suffer from any disability to act as a bankruptcy trustee.

(d) I am eligible to be appointed as bankruptcy trustee of the bankrupt
under regulation 3 of the Insolvency and Bankruptcy Board of India

127
HB on Personal Guarantors to Corporate Debtors under IBC, 2016

(Bankruptcy Process for Personal Guarantors to Corporate
Debtors) Regulations, 2019 and other applicable provisions of the
Code and regulations.

(e) I shall make the disclosures in accordance with the code of conduct
(f) for insolvency professionals as set out in the Insolvency and
Bankruptcy Board of India (Insolvency Professionals) Regulations,
Date: 2016;
Place:
I have the following processes in hand:

Sl. No. Role as No. of processes on the date of consent

1. Interim Resolution Professional

2. Resolution Professional of:

(a) Corporate debtors

(b) Personal guarantors or individuals or partnership
firms

3. Liquidator of:

(a) Liquidation Process

(b) Voluntary Liquidation Process

4. Bankruptcy Trustee

5. Authorised Representative

6. Any other (please state)

(Signature of Insolvency Professional)
Registration No.…..

128
References

1. Report of the Working Group on Individual Insolvency (Regarding
strategy and approach for implementation of the provisions of the
Insolvency and Bankruptcy Code, 2016 in respect of Personal
Guarantors to Corporate Debtors; Partnership Firms and
Proprietorship Firms; and Other Individuals); October 2018

2. Report on bankruptcy process proposing rules and regulations for
personal guarantors to corporate debtors by working group on
individual insolvency, March – 2019

3. Relevant sections of Insolvency and Bankruptcy Code 2016

4. Insolvency and Bankruptcy Board of India (Insolvency Resolution
Process for Personal Guarantors to Corporate Debtors) Regulations,
2019

5. Insolvency and Bankruptcy Board of India (Bankruptcy Process for
Personal Guarantors to Corporate Debtors) Regulations, 2019

6. Insolvency and Bankruptcy (Application to Adjudicating Authority for
Insolvency Resolution Process for Personal Guarantors to Corporate
Debtors) Rules, 2019

7. Insolvency and Bankruptcy (Application to Adjudicating Authority for
Bankruptcy Process for Personal Guarantors to Corporate Debtors)
Rules, 2019

8. Notification No. S. O. 4126(E) [F. No. 30/21/2018-Insolvency Section},
dated 15.11.2019.
ISBN : 978-81-947221-3-7

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