The Insolvency and Bankruptcy Code (Amendment) Act, 2026 (the “Amendment Act”), which received presidential assent on 6 April 2026, inserted sections 96(4) and 124(4) into the Insolvency and Bankruptcy Code, 2016 (the “IBC”) with effect from 26 May 2026. These provisions remove the filing-stage interim moratorium for a personal guarantor to a corporate debtor (a “Personal Guarantor”).

On 21 September 2026, the Insolvency and Bankruptcy Board of India (“IBBI”) issued circular no. IBBI/II/106/2026 (the “IBBI Circular”), clarifying that the amendment also applies to applications that were pending on 26 May 2026. Accordingly, the interim moratorium in such cases ceased to operate from that date.

Earlier Position

Section 94 of the IBC allows a Personal Guarantor who has committed a default to initiate an insolvency resolution process against himself or herself. Section 95 allows a creditor to initiate the same process against a Personal Guarantor where the debt remains unpaid following a demand notice. Before the Amendment Act, filing an application under section 94 or section 95 automatically triggered the interim moratorium under section 96. Pending legal actions or proceedings relating to the debts of the Personal Guarantor were deemed to be stayed, and creditors could not initiate fresh proceedings relating to those debts. The interim moratorium took effect immediately upon filing, before the National Company Law Tribunal (the “NCLT”) considered whether the application should be admitted under section 100.

Section 124 separately stayed pending proceedings, and prevented fresh proceedings, against the Personal Guarantor’s property upon the filing of a bankruptcy application under section 122 or section 123. The Amendment Act removed both filing-stage interim moratoriums. Accordingly, the mere filing of an insolvency resolution or bankruptcy application no longer prevents lenders from pursuing available remedies against a Personal Guarantor.

Treatment of Applications Pending on 26 May 2026

The Amendment Act did not specify whether section 96(4) would apply to applications that were already pending on 26 May 2026. The Bombay High Court considered this issue in Tata Capital Financial Services Limited v. Neel Motors LLP & Ors. (Commercial Arbitration Petition No. 620 of 2021, decided on 24 July 2026) (the “Tata Capital Judgment”). Tata Capital’s petition under section 9 of the Arbitration and Conciliation Act, 1996 had remained pending after its subsequent applications under section 95 of the IBC against the Personal Guarantors triggered the interim moratorium under section 96. The Court held that section 96(4) also applies to pending applications. Accordingly, the interim moratorium remained valid until 25 May 2026 but ceased to operate from 26 May 2026. The Court also granted limited asset-disclosure and non-disposal relief pending arbitration.

The Delhi High Court reached the same conclusion in IDBI Trusteeship Services Limited v. Manish Jain & Ors.(CS(COMM) 800/2025, decided on 19 August 2026) (the “IDBI Trusteeship Judgment”). In that case, the Personal Guarantor sought rejection of a commercial suit on the ground that a pending application under section 95 of the IBC had triggered the interim moratorium under section 96. The Court rejected the application and held that section 96(4) applies to pending applications from 26 May 2026 without affecting the operation of the moratorium before that date. Relying on the Tata Capital Judgment and the IDBI Trusteeship Judgment, the IBBI Circular confirms that the interim moratorium under section 96, and correspondingly under section 124, ceased to operate from 26 May 2026 even where the relevant application was pending before the NCLT on that date.

Current Enforcement Position

In light of the removal of the filing-stage interim moratorium, lenders should identify proceedings that were stayed solely under section 96 or section 124 and take the necessary procedural steps to resume them. While the relevant application remains pending, lenders may invoke the guarantee, continue recovery proceedings or enforce available security, subject to applicable law. However, in the case of an insolvency application under section 94 or section 95, this enforcement window closes upon admission under section 100, when the moratorium under section 101 takes effect. In a bankruptcy case, creditor action following a bankruptcy order is governed by section 128. Lenders should therefore monitor the NCLT proceedings closely.

Enforcement of Personal Guarantees After the 2026 IBC Amendment