Guarantors’ assets will aid corporate debt resolution: IBBI chairperson

Adding assets of personal guarantors to the bankruptcy estate of defaulting companies will be useful for debt resolution, especially in the case of factories, the Insolvency and Bankruptcy Board of India (IBBI) said in its latest quarterly update released on Monday.

The IBC Amendment Act, 2026, which received Presidential ascent in April, enables the transfer of guarantors' assets as part of the insolvency resolution of the debtor company—a significant reform, Ravi Mital, the chairperson of IBBI, said in the March quarter update.

This is particularly useful in situations where assets of the debtor company and the guarantor are closely interlinked, Mital added.

For example, a factory may be owned by the company, while the land on which it is built belongs to a guarantor of the distressed business. In such cases, resolving the corporate debtor in isolation becomes difficult, as a resolution applicant would require both the land and the factory to run the business effectively, the chairperson said.

The amendment now provides that, where a creditor has already taken possession of such an asset by enforcing a security interest, the asset may be transferred as part of the insolvency resolution process, with the prior approval of the committee of creditors, Mital noted.

Much-needed reform

This is a commercially sensible reform, according to Srinivasa Rao, leader and partner, risk advisory at Nangia Global, a professional services firm.

“It recognizes that viable resolution often requires control over interlinked assets, not merely the corporate debtor’s balance sheet. By permitting transfer of guarantor assets already under secured creditor possession, with the approval of the committee of creditors, the amendment can reduce execution risk for resolution applicants and improve recoveries,” said Rao.

The success of the provision will depend on robust valuation, title diligence and transparent decision-making by the committee of creditors, Rao added.

This measure will require careful checks around ownership, security enforcement, related-party dealings and CoC approvals to ensure the provision is used for genuine value maximization and not to transfer disputed assets through the back door, Rao said.

Up to the end of March 2026, 4,890 bankruptcy petitions were filed before the National Company Law Tribunal for the debt resolution of personal guarantors to companies. Fifty-one petitions were also filed before debt recovery tribunals (DRTs).

Overall, 4,941 personal guarantors to companies are facing proceedings for debt resolution amounting to about ₹3 trillion. In about 44 cases, a repayment plan has been approved for about ₹103 crore, about 2.2% of admitted claims.

The 2026 amendments to the IBC make it more resilient and future-ready by addressing practical challenges, reducing delays, and introducing new mechanisms, Mital said in the review.

Corporate rescues in FY26

The IBBI also said that in 2025-26, 225 companies were rescued from bankruptcy under the IBC, compared to 247 the year before.

In FY26, 665 cases were admitted to tribunals, compared with 733 in the year before.

The IBBI said that among resolution plans approved in the March quarter, Jaiprakash Associates Ltd recorded the highest admitted claims at ₹60,636.82 crore. Adani Enterprises Ltd was the successful bidder for the company, JAL informed stock exchanges in March.

Of the total claims from creditors, ₹14,084.20 crore is realizable, which translates to a recovery of 23.23% against admitted claims, the IBBI noted.

Creditors have also moved tribunals to reverse dubious transactions entered into by the erstwhile managements of distressed companies during their pre-bankruptcy period. Over 1,800 such petitions before tribunals are estimated to cover deals worth about ₹4.38 trillion.