Beyond The Moratorium: Recalibrating Personal Guarantor Liability Under The Insolvency And Bankruptcy Code After The 2026 Amendment
Sheefali Sharma, B.A LL.B.,University of Petroleum and Energy Studies, Dehradun Uttarakhand
A Contemporary Analysis of Section 96(4), Pending Proceedings and the Creditor-Guarantor Balance
ABSTRACT
The bankruptcy system has been fundamentally revamped in respect of personal guarantors of corporate debtors by the Bankruptcy and Bankruptcy Code (Amendment) Act, 2026. The operation of the interim moratorium under section 96 of the Insolvency and Bankruptcy Code, 2016 would continue. However, Article 96 (4) does provide one exception. We omit from 96 bankruptcy actions involving a personal guarantor of a debtor corporation. Section 124 grants a parallel exemption during the bankruptcy process. That's a breakthrough. The legislative expiration of the temporary moratorium is not the removal of the protection from a specific demographic. Last update May 26, 2026. The existing procedures have raised the question of vested rights and retrospectivity. In IDBI Trusteeship Services Ltd. v. Manish Jain & Ors. the Delhi High Court held that the revised provision was a continuous process from the outset and the operation was retroactive and not a retroactive nullification of the legitimate past. The study investigates whether the change is a proper solution for the tactical use of the moratorium in the filing phase or it tends to unduly favour individual creditor enforcement in the event of insolvency.
Keywords: IBC Amendment Act 2026, Insolvency & Bankruptcy Code, Personal Guarantor, Section 96, Interim Moratorium, Section 96(4) Corporate Debtor, Rights of Creditors, Individual Insolvency.
