IBBI Says Personal-Guarantor Interim Moratorium Ended on 26 May 2026, Including for Pending Applications

The Insolvency and Bankruptcy Board of India (IBBI) has put a clear date on when the automatic interim moratorium stopped protecting personal guarantors to corporate debtors. In Circular No. IBBI/II/106/2026 dated 21 September 2026, the Board states that the interim moratorium under section 96, and correspondingly section 124, ceased to operate from 26 May 2026 even where the insolvency application was already pending before the Adjudicating Authority on that date.

The circular follows the 2026 amendment to the Insolvency and Bankruptcy Code (IBC), which inserted sub-section (4) in sections 96 and 124. IBBI has linked the effect of that amendment to two recent High Court judgments: Tata Capital Financial Services Limited v. Neel Motors LLP and others decided by the Bombay High Court on 24 July 2026, and IDBI Trusteeship Services Ltd. v. Manish Jain and Ors. decided by the Delhi High Court on 19 August 2026. The official IBBI circular records the resulting position for the insolvency profession.

The 26 May change also reaches applications that were already pending

The important point is not merely that new personal-guarantor filings no longer trigger the old interim moratorium. IBBI says the change also applies to applications that were pending on 26 May 2026. In other words, an application filed before the amendment does not preserve the section 96 or section 124 interim moratorium after that date simply because the case began earlier.

The statutory foundation is the Insolvency and Bankruptcy Code (Amendment) Act, 2026. The official text of the Amendment Act received Presidential assent on 6 April 2026, while the relevant provisions were brought into force from 26 May 2026. The distinction between the date of the Act and the commencement date matters because the moratorium question is tied to when the new sub-sections actually took effect.

Bombay High Court treated a pending filing as a continuing situation

IBBI's circular reproduces the effect of the Bombay High Court's ruling in Tata Capital Financial Services Limited v. Neel Motors LLP and others. The Court considered the words used in section 96(4) and held that the expression covering an application that “is filed” extends to an application already filed and still pending before the Adjudicating Authority.

The practical consequence recorded by IBBI is that the moratorium which had operated until 25 May 2026 ceased from 26 May 2026 in relation to the pending personal-guarantor applications before the Court. The Bombay High Court therefore did not treat the earlier filing date as preserving the old statutory stay indefinitely.

Delhi High Court reached the same result for pending applications

The Delhi High Court, in IDBI Trusteeship Services Ltd. v. Manish Jain and Ors., also treated the amended provision as applying to pending matters. IBBI notes the Court's description of the amendment as having a retroactive or “quasi-retroactive” operation: the new rule operates from its commencement date on a legal situation that was still continuing, rather than rewriting completed events before that date.

For professionals, that distinction is more useful than the terminology alone. The circular does not say that the prior period of moratorium never existed. Its stated position is that the protection ceased on and from 26 May 2026, including in cases that were already pending then.

The insolvency application and the interim moratorium are separate questions

The circular addresses the interim moratorium. It does not say that a pending personal-guarantor insolvency application is automatically withdrawn, dismissed or rendered non-maintainable merely because the statutory stay has ceased. That distinction is important when reviewing live files: the insolvency proceeding may continue before the Adjudicating Authority even though section 96 or section 124 can no longer be relied upon for the interim protection that previously accompanied the filing.

It is also unsafe to treat the circular as a universal direction that every recovery, arbitration, suit or enforcement action must automatically succeed. The narrower conclusion is that the section 96/124 interim moratorium is no longer the statutory bar for the covered personal-guarantor cases from 26 May 2026. Any other stay order, statutory restriction, limitation issue or case-specific defence still has to be examined on its own facts.

Lenders and insolvency teams should revisit files paused only because of the old moratorium

For lenders, insolvency professionals and legal teams, the most immediate use of the circular is a file-level review. Matters that were adjourned, not pursued or internally marked as stayed solely because a section 94 or section 95 personal-guarantor application had triggered the interim moratorium may now require reassessment from the 26 May cut-off.

• Identify the basis of every existing stay: separate matters paused only because of section 96 or section 124 from matters subject to another court, tribunal or statutory restraint.
• Check the filing and procedural history: an application filed before 26 May is not outside the new rule merely because it was already pending.
• Update status notes and advice: descriptions that continue to show the section 96/124 interim moratorium as operative after 25 May may no longer reflect the position communicated by IBBI.
• Do not collapse the insolvency case into the enforcement case: the cessation of the interim moratorium does not itself decide the merits of the creditor's claim or the personal-guarantor insolvency application.

This is different from earlier disputes over misuse of a personal-guarantor filing

CA Samaaj previously covered an NCLAT decision on a Section 94 personal-guarantor application and parallel SARFAESI action. That case focused on whether the insolvency route was being used in a manner that justified the protection claimed in that factual setting. The new IBBI circular is broader in a different way: it records the statutory position after the 2026 amendment that the interim moratorium itself ceased for personal guarantors to corporate debtors from 26 May, including in pending applications.

For advisers, keeping those two questions separate avoids a common analytical error. A court may still examine the bona fides, maintainability and facts of a particular insolvency application, but after the 2026 amendment the section 96/124 interim moratorium cannot be assumed to continue merely because the application predates 26 May.

What the IBBI circular does not decide

The circular is a clarification of the effect of the amendment and the two High Court rulings; it is not a new filing scheme. It does not prescribe a form, fee or fresh compliance deadline. It also does not determine every consequence that may arise in a pending lender-guarantor dispute, including limitation questions, the effect of another subsisting judicial order, or the final outcome of the insolvency application.

The practical rule is therefore precise: for a personal guarantor to a corporate debtor, the interim moratorium under section 96 and correspondingly section 124 ceased from 26 May 2026, and IBBI says that position includes applications already pending before the Adjudicating Authority on that date. Professionals handling older files should test their current litigation and recovery status against that date rather than against the original filing date alone.

Official source: View the official source document