Data showed that lenders recovered ₹234.56 crore at the end of June, 2026 from 64 instances of debt resolution of personal guarantors since they were brought under the bankruptcy code in FY20.
This represents just 1 per cent of the total claims of banks admitted by bankruptcy tribunals, data showed.
The June quarter figure is a jump from the ₹102.78 crore recovered from 44 cases at the end of March, which accounted for 2.16 per cent of the total claims admitted up to that period.
Recovery has been stagnant for two years up to end of March.
The fall in recovery percentage in June indicates admission of more claims by tribunals in the June quarter.
Data indicates the eagerness lenders are showing in pursuing shareholder guarantors to recover dues from the companies, which is making a beginning but has a long way to go.
The latest instance is an NCLT decision on Tuesday in a case involving Zee Group Founder and Chairman Subhash Chandra who stood as a guarantor for certain corporate borrowings.
Chandra however, stressed that the relevant claims against his personal guarantee totalled ₹3,992 crore and not ₹22,006 crore.
The tribunal order made headlines because the ₹22,006 crore admitted claims of banks and the ₹6.25 crore repayment approved from Chandra’s personal estate triggered criticism about the haircut taken by banks.
Chandra on Friday said the group has repaid around ₹43,000 crore of its total borrowings of ₹45,000 crore.
Navod Prasannan, Partner, King Stubb & Kasiva, Advocates and Attorneys said the near-1 per cent recovery rate against personal guarantors as of June 2026 lays bare a structural flaw in the IBC’s guarantor framework rather than a mere implementation gap.
“This is largely because repayment plans under the framework are essentially debtor-proposed settlements rather than court-enforced obligations, leaving creditors with limited leverage to compel meaningful payouts,” said Prasannan.
Provisions relating to insolvency resolution and bankruptcy relating to personal guarantors to corporate debtors had come into force on December 1, 2019.
In April-June 2026, 163 applications for the initiation of individual insolvency of personal guarantors were filed, taking the total applications to date to 5,186. As the number of cases increases, the percentage recovery has come down.
Of these, 971 applications have been filed by the debtors and 4215 applications by the creditors under sections 94 and 95 of the Insolvency and Bankruptcy Code.
While IBBI did not provide the latest figure for claims admitted against individual insolvencies, data as of December 2025 shows that the total debt amount for personal guarantors stood at ₹286,441 crore.
The Code was amended to allow banks and other creditors to recover dues from guarantors if their claims were not fully recovered through the corporate insolvency resolution process.
“Most personal guarantees were given by promoters of companies to secure loans or loan restructuring for companies they once controlled but later failed to repay…The process itself is taking considerable time,” said Amit Kumar Nag, Partner, AQUILAW.
Until recently, the interim moratorium, which was withdrawn under the IBC (Amendment) Act, 2026, allowed guarantors to shield personal assets from enforcement for years while proceedings dragged at the National Company Law Tribunal.
Earlier, an interim moratorium kicked in from the time an insolvency application was filed against a personal guarantor. This prevented creditors from continuing recovery proceedings while the application was pending.
Experts said that by the time a guarantor’s insolvency process concludes, promoters have frequently already restructured holdings, transferred assets to family trusts, or moved wealth beyond the reach of creditors.
