The Insolvency and Bankruptcy Board of India (IBBI) has proposed ending interim moratorium protection for personal guarantors while introducing tighter valuation norms to strengthen the insolvency framework. According to reports from Business Standard, the regulator aims to plug identified gaps, reduce procedural uncertainty, and align the regulatory framework with legislative developments under the Amendment Act, 2026. The proposals come after the 2026 amendment to the Insolvency and Bankruptcy Code (IBC) removed the automatic interim moratorium that previously prevented creditors from continuing recovery proceedings while insolvency applications were pending.
Since provisions relating to personal guarantors came into force in December 2019, 4,941 applications have been filed as of March 31, 2026, for initiation of the personal insolvency resolution process (PIRP) against personal guarantors. As reported by Business Standard, of these cases, 44 have yielded approval of repayment plans, with creditors realizing ₹102.78 crore, which represents 2.16 per cent of their admitted claims. The IBBI has proposed that applicants must inform other parties in writing within 30 days of the amending regulations' commencement that the interim moratorium shall not apply.
The regulator has identified gaps in valuation procedures, noting that while valuations are central to Committee of Creditors (CoC) evaluation of resolution plans, the IBBI has no involvement in valuer appointment and no standardized mechanism exists for keeping valuations confidential. According to Business Standard, the proposed amendments require prior CoC approval and submission of valuation reports in sealed cover. Importantly, the IBBI has proposed removing fair value disclosure from Information Memorandums issued before bids are submitted, instead disclosing it only during plan evaluation phases.
The discussion paper also addresses liquidation procedures, proposing to remove the requirement for liquidators to seek adjudicating authority approval to modify stakeholder list entries, as this requirement has become redundant after recent amendments providing for a Committee of Creditors during liquidation. As reported by Business Standard, till FY25, 2,758 CIRPs had yielded orders for liquidation, with final reports submitted in 1,374 cases. The draft amendments clarify that resolution professionals must continue discharging responsibilities until adjudicating authorities decide on withdrawal applications under Section 12A, even if the CoC has approved it.
The IBBI has invited public comments on the proposed amendments until July 22, 2026, providing stakeholders an opportunity to provide feedback on the regulatory changes. According to Business Standard, these proposals represent a comprehensive effort to strengthen the insolvency framework by addressing procedural gaps and improving the efficiency of resolution processes for both corporate and personal insolvency cases.
