Personal guarantor insolvency turns on repayment plan non-submission, allowing bankruptcy despite disputes over dues and settlement attempts.

The Insolvency and Bankruptcy Code, 2016 requires a personal guarantor to prepare a repayment plan in consultation with the resolution professional during the insolvency process. Where no repayment plan is submitted despite opportunity, the statutory scheme permits progression to bankruptcy proceedings. Objections that dues were wrongly computed or that earlier one-time settlement efforts had been made did not displace this consequence, particularly where liability had been admitted and the guarantors were co-extensively liable under the guarantee. The tribunal therefore treated non-submission of a repayment plan as sufficient basis for initiation of bankruptcy under the Code.

---

---

Issues: Whether bankruptcy proceedings against personal guarantors were maintainable where no repayment plan was submitted during the personal insolvency resolution process, and whether the objections based on alleged incorrect computation of dues and prior settlement efforts could defeat initiation of bankruptcy.

Analysis: The statutory scheme under the Insolvency and Bankruptcy Code, 2016 requires the debtor to prepare a repayment plan in consultation with the resolution professional. If no repayment plan is submitted, the process does not move to a consensual resolution stage, and the failure operates as the statutory basis for further action under the bankruptcy framework. The personal guarantors were already proceeded against as co-extensively liable under the guarantee, and they had not filed any repayment plan despite opportunity. The Court treated the absence of a repayment plan as attracting the consequence contemplated by the Code and held that the creditor was entitled to seek bankruptcy under the relevant provisions. Objections regarding alleged excess computation of dues and earlier one-time settlement proposals did not displace the statutory consequence, particularly when liability had been admitted and the matter had progressed beyond earlier stages of the recovery and insolvency process.

Conclusion: The bankruptcy proceedings were validly initiated and the challenge by the personal guarantors failed.

Ratio Decidendi: Non-submission of a repayment plan in the personal guarantor insolvency process results in the statutory consequence that bankruptcy proceedings may be initiated under the Code, and such initiation cannot be defeated by later objections to quantum or by unaccepted settlement proposals.

---