When actions are already pending against same personal guarantor, a subsequent application u/s 95 IBC is barred: NCLAT

The Chennai Bench of the National Company Law Appellate Tribunal (NCLAT) has clarified that a subsequent insolvency application under Section 95 of the Insolvency and Bankruptcy Code (IBC) against a personal guarantor is barred if proceedings are already pending against the same guarantor. The tribunal held that the initiation of an interim moratorium under Section 96, which automatically comes into effect upon the filing of the first application, prohibits any other legal action against the guarantor concerning their debts. This ruling prevents multiple creditors from filing separate, parallel applications against the same personal guarantor, which could lead to conflicting orders and procedural chaos. The NCLAT emphasized that the correct approach is for other creditors to join the existing proceedings. This ensures a consolidated and orderly resolution process for the personal guarantor's insolvency, in line with the objectives of the IBC.