The Insolvency and Bankruptcy Code (Amendment) Act, 2026 has brought in major amendments to the Principal Act and one such significant changes is insertion of Section 28A, which came into effect on 26.05.2026. Section 28A empowers a creditor to transfer the assets of guarantor (personal/corporate) into the CIRP of the corporate debtor. The rationale behind the amendment as stated by the Select Committee on the IBC(Amendment) Bill, 2025 is to address the challenge of asset fragmentation, for instance, where the corporate debtor owns the factory but the guarantor owns the land, such cases make resolution difficult as the land is not part of the assets available for resolution. Therefore, this provision would consolidate the assets, thereby, enhancing value maximization. Notably, this provision is applicable only during CIRP of the corporate debtor and not during the liquidation proceedings. While the provision promises the enhanced recoveries and broader asset pool for resolution applicants, it also raises important questions regarding the guarantor’s rights. This article examines the implications and challenges associated with Section 28A of the Code.
ANALYSIS OF SECTION 28A:
Section 28A of the Code envisages that a creditor may transfer an asset of a guarantor of the corporate debtor as part of the CIRP and to do the same the creditor must (i) have a security interest over an asset of the guarantor (ii) have taken possession of the same by enforcing the security interest under any law for time being in force which empowers the creditor to transfer the asset. Further, the committee of creditor (CoC) of the corporate debtor shall approve the transfer of asset. If the guarantor is undergoing insolvency resolution, liquidation or bankruptcy under the Code, additional approval will be required from CoC or creditors of the guarantor, as the case may be. Once, the asset is transferred into the CIRP of corporate debtor, the successful resolution applicant acquires all rights in the asset as if the transfer had been made by the owner by the asset, i.e., the guarantor.
For example, under Section 13 of the SARFAESI Act, a secured creditor may enforce the security interest when a borrower makes any default, subject to compliance with the procedure prescribed therein. Further, section 13 (4), empowers the creditor to take possession of the secured assets of the borrower including the right to transfer by way of lease, assignment or sale for realising the secured asset. Consequently, where a creditor has taken possession of an asset belonging to a guarantor of the corporate debtor in accordance with SARFAESI Act or any other applicable law, such asset may subject to the requirements of Section 28A be transferred as part of the CIRP of the corporate debtor.
Prior to introduction of Section 28A, although a creditor could pursue remedies against both the corporate debtor and its guarantor, the enforcement and realization of assets of guarantor typically occurred through separate recovery proceedings including CIRP against the guarantor. As a result, assets of the guarantor remained outside the resolution leading to fragmented recoveries and decrease in resolution value but now section 28A operates as a platform to sell the said asset as a part of corporate debtor’s CIRP rather than independently, thereby, maximizing the resolution value.
IMPACT ON GUARANTOR’S RIGHTS
Though at the outset the provision seems to eliminate parallel proceedings and maximization of value, it also poses challenges to the Guarantor’s Rights. A guarantor’s liability is usually distinct from that of a corporate debtor and Section 28A operates contrary to this well settled principle by including guarantor’s assets into the insolvency estate of the corporate debtor.
Section 28A starts with the non-obstante clause Notwithstanding anything contained in this Code or any other law for the time being in force, which means that it has an overriding effect on the existing laws. The Transfer of Property Act (TPA) matters here because almost every guarantor’s security over land is a mortgage, and the guarantor who mortgages is the mortgagor. The TPA gives every mortgagor, the right of redemption. This gives the mortgagor, a right to pay off the debt and take the property back, until the sale is complete. When we look at the wording of Section 28A, it does not talk about any rights of the guarantors as to when their right to redeem would end.
Further 28A (2) provides for a deeming clause, which states that the transfer of an asset referred to in sub-section (1) under a resolution plan shall vest in the transferee all rights in, or in relation to the asset, as if the transfer had been made by the owner of such asset. Usually, a mortgagor is the owner of the mortgaged property and the mortgage gives the creditor a security interest and not ownership. Yet, this section lets a creditor transfer an asset with effect as if transfer was made by the owner himself, without guarantor’s participation.
Section 28 A also hallows out one more right of a guarantor, the right of subrogation. Under Section 140 of the Indian Contract Act, a guarantor who pays the creditor steps into the creditor’s shoes against the principal borrower. Section 28A is silent on the aspect of protection of this right.
On another note, Section 28A does give something to the guarantor. The surplus, if the asset is transferred for an amount more than the debt, must be returned to the guarantor. Further, where the guarantor itself is in insolvency, the amount received pursuant to the transfer of asset flows into the estate of guarantor. However, the surplus protection only matters in rare cases where a distressed asset sells above the debt and distressed assets usually sell below. Section 28A offers a return of surplus that will likely never arise, while taking away the major rights of the guarantors.
SELECT COMMITTEE REPORT AND AMENDED REGULATIONS:
The Parliamentary Select Committee, in its report on Amendment Bill dated December 17 2025, considered the concerns raised by various stakeholders/experts regarding Section 28A. The concerns principally related to the guarantor’s right of redemption and the interplay between the provisions of SARFAESI Act, TPA and IBC.
However, instead of substantially addressing these concerns, the Committee observed that the interests of guarantors were adequately protected by the requirement to return any surplus realized from the transfer of secured asset. The Committee further noted that that the IBBI would frame regulations governing the procedural aspects of such transfers, thereby ensuring a balance between creditor flexibility and regulated asset transfers.
Pursuant to this, the IBBI, on 01.06.2026, through amendments inserted Regulations 28A and 28N into the CIRP regulations and Regulation 8A into the Liquidation Regulations. A closer examination of these regulations reveals that they are largely procedural in nature and merely acts as an extension to the framework contemplated under Section 28A of the Act. The regulations neither addresses the concerns relating to the guarantor’s right under various other Acts. Rather than introducing substantive safeguards or preserving existing rights of grantors, the regulations primarily facilitate the implementation of Section 28A, leaving the core concerns raised substantially unresolved.
CONCLUSION:
The insertion of Section 28A marks an important development in India’s insolvency framework. By including the assets of guarantor within the resolution process of corporate debtor, Section 28A seeks to maximize value, improve recoveries, and enhance the prospects of successful restructuring.
At the same time, the provision raises significant questions concerning guarantor rights, protections and procedural fairness. Its implementation will require careful balancing of competing interests and thoughtful judicial interpretation.