New Delhi, Aug. 21 -- Individuals who step in as personal guarantors for loans to companies are set to lose a crucial protection. Until now, when a company went bankrupt, guarantors enjoyed a "moratorium" that stopped banks and creditors from touching their assets until the case was finally decided.

That breathing space is gone with the proposed changes in the Insolvency and Bankruptcy Code (IBC), 2016.

The Insolvency and Bankruptcy Code (Amendment) Bill, 2025, tabled in Parliament last week, makes it clear that existing moratorium protections under Sections 96 and 124 will no longer apply to personal guarantors.

According to lawyers that Mint spoke to, banks can now immediately attach houses, freeze bank accounts, sell pledged shares,...