In a discussion paper, the insolvency regulator said, “The proposals are aimed at plugging identified gaps, reducing procedural uncertainty, and aligning the regulatory framework with legislative developments under the Amendment Act, 2026.”
Earlier, an interim moratorium came into effect from the time an insolvency application was filed against a personal guarantor. This prevented creditors from continuing recovery proceedings while the application was pending. To prevent misuse of this provision, the Insolvency and Bankruptcy Code (Amendment) Act, 2026, removed the automatic interim moratorium.
The IBBI said that since certain financial creditors have sought clarification on whether they may continue or initiate recovery proceedings in respect of applications pending when the amendments came into effect, it has proposed to “cast a procedural obligation on the applicant to intimate the other party, in writing, within 30 days of commencement of the amending regulations, that the interim moratorium shall not apply”.
Since the provisions relating to insolvency resolution and bankruptcy for personal guarantors came into force in December 2019, 4,941 applications had been filed as of March 31 to initiate the personal insolvency resolution process for personal guarantors. Of these, 44 cases resulted in the approval of repayment plans, with creditors realising ₹102.78 crore, or 2.16 per cent of their admitted claims.
The regulator observed that while valuations are central to the committee of creditors’ (CoC’s) evaluation of resolution plans, the CoC has no role in appointing valuers and there is no standardised mechanism to keep valuation reports confidential. It has therefore proposed amending the regulations to require prior CoC approval for appointing valuers and submission of valuation reports in a sealed cover. Importantly, the IBBI has also proposed doing away with the disclosure of fair value in the information memorandum issued before bids are submitted, allowing it to be disclosed only when resolution plans are being evaluated.
The draft amendments also seek to clarify that the resolution professional must continue discharging responsibilities until the adjudicating authority decides on an application for withdrawal from the corporate insolvency resolution process (CIRP) under Section 12A, even if the CoC has approved the withdrawal.
The discussion paper has also proposed removing the requirement for liquidators to seek the adjudicating authority’s approval to modify entries in the list of stakeholders, saying the requirement has become redundant after the recent amendment providing for a CoC during liquidation.
Until 2024-25, a total of 2,758 CIRPs had resulted in liquidation orders, of which final reports had been submitted in 1,374 cases, IBBI data showed. Public comments on the proposals have been invited until July 22.
 "Insolvency and Bankruptcy Board of India, IBBI")