Insolvency Resolution of Individuals: Sections 94 to 120

The insolvency resolution process is the centre of Part III. Instead of selling the debtor's assets, it lets an individual or firm agree a repayment plan with creditors, under the supervision of a resolution professional and the approval of the adjudicating authority. If the plan fails, bankruptcy follows. Today, the process applies in practice to personal guarantors to corporate debtors, before the NCLT. This note walks through each stage, from application to discharge, including the 2026 changes.

1. Who May Apply

• Debtor, section 94. A debtor who commits a default may apply personally or through a resolution professional; for a partnership debt, an application may be made only if the majority of the partners file it jointly; a debtor who is an undischarged bankrupt, is undergoing a fresh start, insolvency resolution or bankruptcy process, or had an application admitted in the preceding 12 months may not apply.
• Creditor, section 95. A creditor, or creditors jointly, may apply through a resolution professional against a debtor, or against any one or more partners or the firm for a partnership debt, after serving a demand notice that the debtor has not complied with within 14 days.
• Forum. The NCLT for personal guarantors to corporate debtors (section 60), and the Debts Recovery Tribunal for others, once Part III is extended to them (Topic 65)

2. From Application to Admission

Figure 1: Stages of the insolvency resolution process

• Resolution professional, sections 97 and 98. If the application names a resolution professional, the authority asks the IBBI to confirm that no disciplinary proceedings are pending against him; otherwise the IBBI nominates one; the professional may be replaced by creditors.
• Examination and report, section 99. The professional examines the application and submits a report recommending acceptance or rejection within 21 days of appointment, increased from 10 days in 2026; the debtor may show that the debt has been repaid, and the professional may seek information from the debtor and the creditor.
• Admission, section 100. The authority passes an order admitting or rejecting the application within 14 days of the report, with the moratorium under section 101 following admission (Topic 68)
• Public notice and claims, sections 102 to 104. Within 7 days of admission, the authority issues a public notice inviting claims within 21 days, and the resolution professional prepares a list of creditors.

3. The Repayment Plan

Figure 2: Contents of a repayment plan (section 105)

• Section 105. The debtor prepares, in consultation with the resolution professional, a repayment plan containing a proposal to creditors for restructuring his debts or affairs; it may authorise the professional to carry on the business, realise assets or manage funds, and must justify the plan and provide for the professional's fee.
• Section 106. The professional submits the plan with a report within 21 days of the last date for claims, stating whether the plan complies with law, has a reasonable prospect of approval and implementation, and whether a meeting of creditors is necessary.
• 2026 changes. If no repayment plan is submitted in time, the professional reports to the authority, which terminates the process, and the debtor or creditors may apply for bankruptcy (section 106(1A)); for personal guarantors to corporate debtors, a meeting of creditors must always be summoned (section 106(3A))
• Meeting and approval, sections 107 to 113. The meeting is held after at least 14 days' notice; the plan, with any modifications consented to by the debtor, is approved by a majority of more than three-fourths in value of the creditors present in person or by proxy and voting.

4. Order, Implementation and Discharge

Figure 3: How the process ends

• Section 114. The authority approves or rejects the plan on the report of the meeting, and may give directions for its implementation or require the meeting to be reconvened to reconsider it.
• Section 115. An approved plan takes effect as if proposed by the debtor at the meeting and binds the debtor and the creditors entitled to vote; if the plan is rejected, the debtor and creditors may apply for bankruptcy.
• Implementation, sections 116 to 118. The professional supervises implementation; on completion, he reports to the authority within 14 days; if the plan is not fully implemented within its period, it ends prematurely and bankruptcy may be sought.
• Discharge, section 119. The professional applies for a discharge order in respect of the debts covered by the plan, which may provide for early discharge; the order does not release persons other than the debtor.

5. Frequently Asked Questions

What majority of creditors must approve a repayment plan?

More than three-fourths in value of the creditors present in person or by proxy and voting at the meeting, under section 111.

Can one partner alone apply for insolvency resolution of a firm's debt?

No. Under section 94, an application in respect of a partnership debt may be made only if the majority of the partners file it jointly.

What happens if the debtor never submits a repayment plan?

After the 2026 Amendment, the authority terminates the process on the professional's report under section 106(1A), and the debtor or creditors may apply for bankruptcy.

Does a discharge order under section 119 release a co-guarantor?

No. The discharge order releases only the debtor in respect of the debts covered by the plan, not any other person liable for them.

6. Related Topics

• Topic 66: Personal Guarantors. The process in practice.
• Topic 68: Interim Moratorium. Sections 96 and 101.
• Topic 70: Bankruptcy Order and Trustee. When the plan fails.