New IBBI Regulation What Happens If Personal Guarantors Don’t Submit a Repayment Plan?
The Insolvency and Bankruptcy Board of India (IBBI) has taken a key step to plug a procedural gap in the personal guarantor insolvency framework. In its latest move, it has notified the IBBI (Insolvency Resolution Process for Personal Guarantors to Corporate Debtors) (Amendment) Regulations, 2025, introducing a new Regulation 17B.
This amendment now provides a clear legal path for Resolution Professionals (RPs) when a personal guarantor fails to submit a repayment plan as required under Section 105 of the Insolvency and Bankruptcy Code, 2016.
Why This Amendment Was Needed
Until now, there was no explicit direction for the RP on what to do if the personal guarantor simply chose not to file a repayment plan. This lack of clarity often led to delays, confusion, and even litigation. The new Regulation 17B aims to fix that.
Regulation 17B – Key Highlights
Under the newly inserted Regulation 17B, the following steps are now mandatory:
| Situation | Action by Resolution Professional |
|---|---|
| Personal guarantor does not submit a repayment plan under Section 105 | RP must file an application before the Adjudicating Authority (AA) |
| Additional requirement | RP must obtain approval from creditors before filing |
| Purpose of application | To intimate non-submission and seek directions from the AA |
This amendment closes a critical procedural gap and ensures that the process does not stall if the debtor fails to act.
Legal Reference: What Section 105 of IBC Says
Section 105 of the Insolvency and Bankruptcy Code, 2016 mandates the personal guarantor to submit a repayment plan within a stipulated period, detailing how they propose to settle their debts.
In case the guarantor fails to prepare and submit such a plan, the law was silent on the RP’s role — until now.
Practical Impact on Insolvency Proceedings
Here’s how this affects ongoing and future insolvency cases involving personal guarantors:
- Faster Resolution: The RP can now move forward even if the debtor is non-cooperative.
- Judicial Oversight: The Adjudicating Authority (NCLT) will guide the next steps, preventing misuse or delays.
- Creditors’ Involvement: Their approval adds a layer of accountability and transparency.
Expert View: What Resolution Professionals Should Do
“This is a positive reform. Resolution Professionals now have legal backing to act swiftly when the debtor remains inactive. It promotes process discipline under the personal guarantor framework.”
— Amit Jain, Insolvency Consultant, Mumbai
Real-World Use Case
Scenario: A corporate debtor defaults, and the RP initiates proceedings against the personal guarantor under Section 95 of IBC. Despite notices, the guarantor fails to submit a repayment plan.
Old Regime: RP waits, process stuck.
New Regime (Post-Regulation 17B): RP files an application with creditor approval to inform the NCLT and seek further directions.
Result: Time saved. Process moves forward legally.
FAQs on Non-Submission of Repayment Plan
Q1. What is a repayment plan under IBC?
A document submitted by a personal guarantor proposing how debts will be repaid.
Q2. What happens if no repayment plan is submitted?
As per Regulation 17B, the RP must seek directions from the NCLT.
Q3. Does the RP need creditor consent before filing?
Yes. Approval from the creditors is mandatory.
Q4. Can the NCLT reject the RP’s application?
The NCLT may pass suitable orders, including closure or continuation of the process.
Summary
IBBI has inserted Regulation 17B to guide Resolution Professionals when a personal guarantor fails to submit a repayment plan under IBC Section 105. With creditor approval, the RP must now seek directions from the Adjudicating Authority, ensuring process continuity.
Final Thoughts
This amendment reinforces the procedural integrity of personal guarantor insolvency under IBC. It balances debtor obligations, creditor rights, and the RP’s role — keeping the process efficient and legally sound.