Guarantors' assets will help resolve companies' debt: IBBI Chairman

Adding assets of personal guarantors to the bankruptcy estate of insolvent companies will be helpful in resolving debts, especially in the case of factories, the Insolvency and Bankruptcy Board of India (IBBI) said in its latest quarterly update issued on Monday.

The IBC Amendment Act of 2026, which received presidential assent in April, allows for the transfer of guarantors’ assets as part of a debtor company’s insolvency resolution — a significant reform, Ravi Mital, chairman of the IBBI, said in a March quarter update.

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

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For example, a factory may be owned by a company, while the land on which it is built belongs to the guarantor of the business at risk. In such cases, resolving the company’s debt in isolation becomes difficult because the resolution applicant would require both the land and the factory to run the business efficiently, the chairman said.

The amendment now provides that in case a creditor has already seized such property by enforcing a lien, the property can be transferred as part of the bankruptcy resolution process with the prior approval of the creditors’ committee, Mital noted.

Much needed reform

According to Srinivasa Rao, head and risk advisory partner at Nangia Global, a professional services firm, this is a commercially sound reform.

“It recognizes that a viable resolution often requires control over connected assets, not just the corporate debtor’s balance sheet. By allowing the transfer of assets of a guarantor already held by a secured creditor, with the approval of a committee of creditors, the amendment can reduce enforcement risk for resolution applicants and improve debt recovery,” Rao said.

The success of the reserve will depend on robust valuation, stewardship of ownership and transparent decision-making by the committee of creditors, Rao added.

The measure will require careful checks on ownership, security enforcement, related party negotiations and CoC approvals to ensure that the provision is used for true value maximization and that questionable assets are not transferred through the back door, Rao said.

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By the end of March 2026, 4,890 bankruptcy petitions had been filed with the National Company Law Tribunal to resolve personal guarantors’ debts to companies. Fifty-one applications were also filed with Debt Recovery Tribunals (DRTs).

A total of 4,941 personal guarantors of companies face debt relief proceedings in the amount of approx ₹3 trillion. In approx. 44 cases, an installment plan was approved for approx ₹103 million, about 2.2% of admitted claims.

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

Corporate bailouts in FY26

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

In FY26, 665 cases were admitted to the tribunals, compared to 733 the previous year.

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

From total receivables from creditors ₹14,084.20 crore are realizable, representing a return of 23.23% against recognized claims, IBBI noted.

Creditors have also moved tribunals to overturn questionable deals made by former managements of troubled companies during their pre-bankruptcy period. More than 1,800 such petitions before the tribunal are estimated to cover deals worth approx. ₹4.38 trillion.