No interim moratorium for personal guarantors from 26 May 2026, even where the application was already pending: IBBI Circular 106 cites Bombay and Delhi High Courts
IBBI has told insolvency professionals that the interim moratorium under section 96 (and section 124) of the Insolvency and Bankruptcy Code, in respect of a personal guarantor to a corporate debtor, ceased to operate from 26 May 2026 for applications pending before the Adjudicating Authority on that date. The circular rests on judgments of the Bombay High Court (24 July 2026) and the Delhi High Court (19 August 2026).
Key facts
- Published
- 21 September 2026
- Section
- Insolvency
- What it is
- Clarified
- In force
- Interim moratorium ceased from 26 May 2026; circular dated 21 September 2026
- Who it affects
- Personal guarantors to corporate debtors, their creditors (banks, NBFCs, trustees), insolvency professionals, IPEs and IPAs
In 30 seconds
- Circular No. IBBI/II/106/2026 is dated 21 September 2026 and is issued under section 196 of the Code.
- The IBC (Amendment) Act, 2026 inserted sub-section (4) in sections 96 and 124: the interim moratorium shall not apply in respect of a personal guarantor to a corporate debtor, with effect from 26 May 2026.
- Bombay High Court, Tata Capital Financial Services Limited v. Neel Motors LLP and others, 24 July 2026: “is filed” includes applications already filed and pending.
- Delhi High Court, IDBI Trusteeship Services Ltd. v. Manish Jain and Ors., 19 August 2026: section 96(4) is “retroactive” and applies to pending applications.
- IBBI’s conclusion: the interim moratorium has ceased from 26 May 2026 for applications pending on that date.
हिंदी में सार
IBBI ने परिपत्र IBBI/II/106/2026 (21 सितंबर 2026) से दिवाला पेशेवरों को बताया है कि कॉरपोरेट देनदार के व्यक्तिगत गारंटर के मामले में धारा 96 (और धारा 124) का अंतरिम अधिस्थगन 26 मई 2026 से समाप्त हो चुका है — उन आवेदनों में भी जो उस तारीख़ को न्यायनिर्णायक प्राधिकरण के सामने लंबित थे। परिपत्र बॉम्बे हाई कोर्ट (24 जुलाई 2026) और दिल्ली हाई कोर्ट (19 अगस्त 2026) के फ़ैसलों पर आधारित है।
Before and now
In the Bombay High Court case, the moratorium operated in respect of the guarantors until 25 May 2026.
Ceased to operate from 26 May 2026, including for applications pending before the Adjudicating Authority on that date.
What the circular says
By Circular No. IBBI/II/106/2026 dated 21 September 2026, addressed to all registered insolvency professionals, insolvency professional entities and insolvency professional agencies, IBBI has drawn attention to two High Court judgments on the interim moratorium for personal guarantors to corporate debtors.
The background, as the circular states it: the Insolvency and Bankruptcy Code (Amendment) Act, 2026 inserted sub-section (4) in sections 96 and 124 of the Code, providing that the interim moratorium shall not apply in respect of a personal guarantor to a corporate debtor, with effect from 26 May 2026.
The question was whether this covers only applications filed after that date, or also those already pending.
The two judgments
| Court and case | Date | What the court observed, as quoted in the circular |
|---|---|---|
| Bombay High Court — Tata Capital Financial Services Limited v. Neel Motors LLP and others (Commercial Arbitration Petition No. 620 of 2021) | 24 July 2026 | The phrase “where an application is filed” brings within its sweep anything that is filed and is pending with the Adjudicating Authority as of that date. The moratorium that operated in respect of the guarantor-respondents until 25 May 2026 ceased to operate from 26 May 2026 for applications filed under section 95; the petition was not barred by the moratorium |
| Delhi High Court — IDBI Trusteeship Services Ltd. v. Manish Jain and Ors. (CS(COMM) 800/2025) | 19 August 2026 | Sub-section (4) of section 96 is “retroactive”, even though the amending Act did not expressly say so, and would be applicable to pending applications |
The Bombay High Court also noted that reading “is filed” to include applications already filed and pending does not give the provision retrospective effect; it has prospective effect from the date on which the provision takes effect.
IBBI’s position
“Accordingly”, the circular says, it may be noted that the interim moratorium under section 96 (and, correspondingly, section 124) of the Code, in respect of a personal guarantor to a corporate debtor, has ceased to operate with effect from 26 May 2026 in respect of applications pending before the Adjudicating Authority as on that date.
What it means in practice
- A pending application concerning a personal guarantor to a corporate debtor no longer carries an interim moratorium from 26 May 2026.
- In the Bombay case, this meant the creditor’s petition could be considered as not barred by the moratorium.
What insolvency professionals should do
Insolvency professionals handling personal guarantor matters should take note of the circular and proceed on the footing that, for applications pending as on 26 May 2026, the interim moratorium under sections 96 and 124 is no longer in operation for the guarantor.
Questions and answers
Does the interim moratorium still protect a personal guarantor to a corporate debtor?
No. Sub-section (4) of sections 96 and 124 of the Code, inserted by the IBC (Amendment) Act, 2026, provides that the interim moratorium shall not apply in respect of a personal guarantor to a corporate debtor with effect from 26 May 2026.
What about applications filed before 26 May 2026 and still pending?
IBBI’s circular notes that the interim moratorium has ceased to operate with effect from 26 May 2026 in respect of applications pending before the Adjudicating Authority as on that date.
Which judgments does IBBI rely on?
The Bombay High Court judgment dated 24 July 2026 in Tata Capital Financial Services Limited v. Neel Motors LLP and others, and the Delhi High Court judgment dated 19 August 2026 in IDBI Trusteeship Services Ltd. v. Manish Jain and Ors.
Is this a retrospective change?
The Bombay High Court said that reading “is filed” to include pending applications does not give retrospective effect; the provision has prospective effect from the date it takes effect. The Delhi High Court described the provision as “retroactive” and applicable to pending applications.
Published 21 September 2026. Updated 5 October 2026. This report is for general information and is not professional advice. Read the source document before acting on it.