NCLT Mumbai admits a personal guarantor’s IBC Section 94 petition over ₹1.65 crore default, triggering moratorium under Section 101.
NCLT Allows Personal Guarantor to Initiate Insolvency
In a precedent-aiding decision, the NCLT, Mumbai, has admitted a petition by a personal guarantor under Section 94 of the Insolvency and Bankruptcy Code (IBC), 2016, for initiating a personal insolvency resolution process (PIRP) due to an inability to repay ₹1.65 crore in defaulted loans.
The bench held that a personal guarantor, upon invocation of guarantee, becomes liable as a 'person' under the IBC and is entitled to seek resolution relief if they are unable to meet obligations. The moratorium under Section 101 was declared, prohibiting creditors from initiating fresh recovery proceedings.
This decision expands access to insolvency relief for individuals facing cascading liabilities due to corporate defaults. It may encourage more guarantors to proactively seek protection, potentially reducing unilateral enforcement actions by banks and promoting structured settlements.
Citations
- In re: Mr. Vikram Mehta (2026) NCLT Mumbai
