Personal Guarantor Insolvency: resolution professional report can lead to rejection of guarantor admission and creditors pursuing Chapter IV remedies.

The text addresses personal guarantor insolvency procedure, emphasising that the resolution professional must examine applications and report on the guarantor's capacity to prosecute insolvency proceedings; the tribunal may act on that report to reject an admission application where the guarantor cannot bear process expenses or propose a viable repayment plan, and such rejection triggers that creditors may pursue remedies under Chapter IV. It clarifies that moratorium and creditor claim verification rules apply on admission, but Chapter IV consequences arise only following applicable Chapter III orders and are not directly operative where rejection occurs solely for inability to prosecute.

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Issues: Whether the National Company Law Tribunal correctly rejected the personal guarantor's application under Section 94 of the Insolvency and Bankruptcy Code, 2016 on the basis of the resolution professional's report (IA No. 6697/ND/2023) thereby disposing of CP (IB) No. 1129/ND/2020 and IA No. 5335/ND/2022 and directing creditors to proceed under Chapter IV.

Analysis: The issue turns on the statutory framework for personal guarantor insolvency under the Insolvency and Bankruptcy Code, 2016 including the moratorium triggered on admission, the process for inviting and verifying creditor claims (Sections 100, 103, 104), the role and powers of the resolution professional under Section 99 to examine a Section 94 application and file a report, and the consequence under Section 100(4) when rejection is recommended for specified grounds. The resolution professional submitted a report and an addendum stating that the guarantor could not bear insolvency process expenses, was unable to propose a repayment plan, and that admission would be ineffective. The Tribunal acted on that report in exercise of its authority under Section 99 and Section 100, rejecting the Section 94 application and disposing of the connected petitions, while noting that Section 100(4) and Chapter IV consequences apply only in specified circumstances; Chapter IV provisions such as Section 122 are triggered after orders under Chapter III and are not directly operative when rejection occurs for inability to prosecute the process.

Conclusion: The Tribunal's rejection of the Section 94 application based on the resolution professional's report and consequent disposal of CP (IB) No. 1129/ND/2020 and IA No. 5335/ND/2022 was correct; the appeal is dismissed and creditors are entitled to pursue remedies under Chapter IV as indicated by the Tribunal.

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