Interim Moratorium

IBC, 2016 — Section 96

In personal insolvency proceedings under Part III of the IBC, when an application is filed under Section 94 or 95, an interim-moratorium commences on the date of the application in relation to all the debts and ceases on admission of the application, when the Section 101 moratorium takes over. Since 26 May 2026, Section 96(4) provides that it does not apply where the application is for an insolvency resolution process in respect of a personal guarantor to a corporate debtor. Distinguished from the corporate moratorium under Section 14 IBC which applies only to corporate debtors.

In practice, the interim moratorium is the personal-insolvency counterpart to the corporate freeze, and it bites the moment an application under Section 94 or 95 of the IBC, 2016 is filed in respect of an individual or partnership firm, by force of Section 96, and lasts until the application is admitted. Since 26 May 2026, however, Section 96(4) provides that the section does not apply where the application is for an insolvency resolution process in respect of a personal guarantor to a corporate debtor — so a personal guarantor being chased simultaneously in the DRT, before a SARFAESI 17 application, and under a Section 138 complaint no longer obtains an interim moratorium by filing. For other individual debtors, the timing of an insolvency application can still stay pending debt-enforcement proceedings, so counsel monitor whether an interim moratorium has been triggered before pressing ahead. The distinction from the corporate moratorium under Section 14 — which protects only corporate debtors — is what trips parties up, because the two regimes have different start points and scope. Parties confirm which moratorium, if any, is in force before continuing enforcement.