IBBI Says Interim Moratorium For Personal Guarantors Ceased From May 26, 2026 Even In Pending Cases

In a circular issued on September 21, 2026, the Insolvency and Bankruptcy Board of India (IBBI) has clarified that the interim moratorium applicable to personal guarantors of corporate debtors under Sections 96 and 124 of the Insolvency and Bankruptcy Code (IBC) ceased to operate from May 26, 2026.

The circular also applies to applications that were already pending before the Adjudicating Authority on that date.

Section 96(1) of the IBC provides for an interim moratorium from the date of filing of an application under Section 94 or 95 in relation to debts of a personal guarantor. Similarly, Section 124 deals with the interim moratorium in the bankruptcy process.

The IBC (Amendment) Act, 2026 inserted sub section (4) in Sections 96 and 124, specifically providing that the interim moratorium shall not apply to a personal guarantor to a corporate debtor with effect from May 26, 2026.

The clarification follows a July 24, 2026 judgment of the Bombay High Court in Tata Capital Financial Services Ltd. v. Neel Motors LLP & Ors.

In the said judgment, the Court held that the expression “where an application is filed” covers applications that had already been filed and were pending before the Adjudicating Authority.

The Court observed that Section 96(4) operates prospectively from May 26, 2026 but applies to pending applications as well. Consequently, the moratorium that had operated in respect of the concerned personal guarantors until May 25, 2026 ceased from May 26, 2026.

IBBI also referred to the Delhi High Court's August 19, 2026 judgment in IDBI Trusteeship Services Ltd. v. Manish Jain & Ors., which similarly held that the amendment introducing Section 96(4) was retroactive and amounted to quasi retroactivity making it applicable to pending applications.

Accordingly, the IBBI clarified that the interim moratorium under Section 96 and correspondingly, Section 124 in respect of a personal guarantor to a corporate debtor, ceased to operate from May 26, 2026 even where the insolvency application was pending before the Adjudicating Authority on that date.