Notification No. IBBI/2025-26/GN/REG125; Dated: 19.05.2025
1. What Has Changed?
The Insolvency and Bankruptcy Board of India (IBBI) has inserted a new Regulation 17B into the IBBI (Insolvency Resolution Process for Personal Guarantors to Corporate Debtors) Regulations, 2019 through the Amendment Regulations, 2025 (Notification No. IBBI/2025-26/GN/REG125, dated 19 May 2025).
2. Operational Workflow Under Reg-17B
- Trigger event – No repayment plan is filed by the debtor within the statutory period.
- Creditor approval – RP seeks a simple majority consent (by value) of creditors for making an application.
- Application to AA – RP files Form PG-17B (expected to be notified) stating:
- Case details & timelines
- Efforts made to procure the plan
- Minutes evidencing creditor approval
- AA’s possible directions –
- Grant an ad‐hoc extension for filing the plan, or
- Direct the RP to convene creditors’ meeting to decide further action, or
- Pass orders for transition to the Bankruptcy Process (s. 121) if revival appears futile.
3. Implications for Key Stakeholders
3.1 Creditors
- Provides certainty of timeline—they no longer remain in limbo if the debtor is uncooperative.
- Opportunity to fast-track alternate strategies (e.g., bankruptcy) with AA’s backing.
3.2 Debtors (Personal Guarantors)
Signals that inaction now attracts swift judicial attention; may nudge timely cooperation.
3.3 Adjudicating Authority (NCLT)
Gains a clear jurisdictional hook to issue time-bound directions, reducing process delays.
4. Action Points for Insolvency Professionals & Lawyers
- Amend engagement letters to highlight RP’s obligation under Reg-17B.
- Educate guarantors at the first meeting about the consequences of non-submission.
- Align case management software to automatically flag Day 22 for possible 17B filing.
5. Conclusion
Regulation 17B plugs a critical procedural gap by compelling the resolution professional—with creditor consent—to approach the Adjudicating Authority whenever a debtor fails to table a repayment plan under Section 105. The move is expected to accelerate personal guarantor resolution timelines and curb tactical delays. All RPs handling such cases should incorporate the new mandate into their standard operating procedures without delay.
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