The number of cases filed against the personal guarantors last fiscal increased 24 per cent to at two-year high of 1,027 against 830 in the previous year, according to the Insolvency and Bankruptcy Board of India data.
| Photo Credit:
PRAKASH SINGH
Claims filed against personal guarantors in bankruptcy proceedings has increased 80 per cent last fiscal to ₹68,666 crore against ₹38,079 crore logged in FY24, even as recoveries through corporate insolvency resolution process remain low.
The number of cases filed against the personal guarantors last fiscal increased 24 per cent to at two-year high of 1,027 against 830 in the previous year, according to the Insolvency and Bankruptcy Board of India data.
In the last six financial years, a total of 4,203 cases were filed against personal guarantors with a claim of ₹2.78 lakh crore. However, resolution professionals (RP) were appointed in 1,832 cases. After the appointment of RP, 135 cases have been withdrawn/ rejected/ dismissed, and 664 cases have been admitted.
Out of the 664 ongoing cases, 196 have been closed. Of these, 12 have been withdrawn; 143 have been closed on non-submission or rejection of repayment plan; and 39 have yielded approval of repayment plan leading to creditors realising ₹129 crore, which is 2.49 per cent of their admitted claims.
In 2021, the Supreme Court allowed creditors to initiate insolvency proceedings against personal guarantors even if the resolution process for the corporate debtor is ongoing or has been completed.
Anjali Jain, Partner at Areness Law said the number of cases filed against personal guarantors indicate the aggressive and rigorous approach of creditors, but this might be a mere checkbox exercise as well.
The crystallized recovery figure of 2.49 per cent in the approved repayment plans does not seem to suggest a reasonable nexus with the said approach as resolution of individuals is not ultimate intention unlike in CIR process, she said.
With corporate resolution plans often involving over 70 per cent haircuts, creditors were pushed to recover shortfalls from guarantors.
In the Essar Steel case promoters’ guarantees were invoked to offset losses after a ₹42,000 crore resolution against a claim of ₹54,000 crore.
Similarly, in the Videocon insolvency, creditors targeted personal guarantors like Venugopal Dhoot to recover dues after a ₹31,000 crore haircut.
Sonam Chandwani, Managing Partner, KS Legal & Associates, said guarantors, often promoters, face asset seizures or bankruptcy, as seen in the case of Sanjay Singal of Bhushan Steel, where personal assets were targeted post-resolution.
However, it could stifle innovation if entrepreneurs fear personal ruin. Policymakers should introduce safeguards, like capped liability for non-fraudulent guarantors or time-bound proceedings, to balance recovery with economic growth, she said.
Without calibration, the IBC’s rigor might discourage new ventures, impacting job creation and investment, while its current trajectory ensures creditors recover more but at the cost of potential economic dynamism, said Chandwani.
Published on May 26, 2025
The number of cases filed against the personal guarantors last fiscal increased 24 per cent to at two-year high of 1,027 against 830 in the previous year, according to the Insolvency and Bankruptcy Board of India data.
| Photo Credit:
PRAKASH SINGH
Claims filed against personal guarantors in bankruptcy proceedings has increased 80 per cent last fiscal to ₹68,666 crore against ₹38,079 crore logged in FY24, even as recoveries through corporate insolvency resolution process remain low.
The number of cases filed against the personal guarantors last fiscal increased 24 per cent to at two-year high of 1,027 against 830 in the previous year, according to the Insolvency and Bankruptcy Board of India data.
In the last six financial years, a total of 4,203 cases were filed against personal guarantors with a claim of ₹2.78 lakh crore. However, resolution professionals (RP) were appointed in 1,832 cases. After the appointment of RP, 135 cases have been withdrawn/ rejected/ dismissed, and 664 cases have been admitted.
Out of the 664 ongoing cases, 196 have been closed. Of these, 12 have been withdrawn; 143 have been closed on non-submission or rejection of repayment plan; and 39 have yielded approval of repayment plan leading to creditors realising ₹129 crore, which is 2.49 per cent of their admitted claims.
In 2021, the Supreme Court allowed creditors to initiate insolvency proceedings against personal guarantors even if the resolution process for the corporate debtor is ongoing or has been completed.
Anjali Jain, Partner at Areness Law said the number of cases filed against personal guarantors indicate the aggressive and rigorous approach of creditors, but this might be a mere checkbox exercise as well.
The crystallized recovery figure of 2.49 per cent in the approved repayment plans does not seem to suggest a reasonable nexus with the said approach as resolution of individuals is not ultimate intention unlike in CIR process, she said.
With corporate resolution plans often involving over 70 per cent haircuts, creditors were pushed to recover shortfalls from guarantors.
In the Essar Steel case promoters’ guarantees were invoked to offset losses after a ₹42,000 crore resolution against a claim of ₹54,000 crore.
Similarly, in the Videocon insolvency, creditors targeted personal guarantors like Venugopal Dhoot to recover dues after a ₹31,000 crore haircut.
Sonam Chandwani, Managing Partner, KS Legal & Associates, said guarantors, often promoters, face asset seizures or bankruptcy, as seen in the case of Sanjay Singal of Bhushan Steel, where personal assets were targeted post-resolution.
However, it could stifle innovation if entrepreneurs fear personal ruin. Policymakers should introduce safeguards, like capped liability for non-fraudulent guarantors or time-bound proceedings, to balance recovery with economic growth, she said.
Without calibration, the IBC’s rigor might discourage new ventures, impacting job creation and investment, while its current trajectory ensures creditors recover more but at the cost of potential economic dynamism, said Chandwani.
Published on May 26, 2025
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The point of using Lorem Ipsum is that it has a more-or-less normal distribution of letters, as opposed to using ‘Content here, content here’, making
The point of using Lorem Ipsum is that it has a more-or-less normal distribution of letters, as opposed to using ‘Content here, content here’, making it look like readable English. Many desktop publishing packages and web page editors now use Lorem Ipsum as their default model text, and a search for ‘lorem ipsum’ will uncover many web sites still in their infancy.
It is a long established fact that a reader will be distracted by the readable content of a page when looking at its layout. The point of using Lorem Ipsum is that it has a more-or-less normal distribution
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