Form B Notice to Personal Guarantors – What You Need to Know

The Insolvency and Bankruptcy (Application to Adjudicating Authority for Insolvency Resolution Process of Personal Guarantors to Corporate Debtors) Rules, 2019 (“PG Rules, 2019”) provide a framework for initiating insolvency proceedings against personal guarantors of corporate debtors.

One of the critical procedural requirements under Rule 7(1) is the issuance of Form B notice by the financial creditor or operational creditor to the guarantor. This notice serves as a demand for repayment and must be accompanied by supporting documents to substantiate the default.

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1. Purpose of Form B Notice

• Form B notice is a formal communication to the personal guarantor, informing them of the default by the corporate debtor and demanding repayment of the guaranteed debt.

• Proper documentation ensures the guarantor is aware of the exact amount of liability, and reduces chances of disputes in later proceedings.

• Annexing relevant documents also strengthens the application when filed with the NCLT under the PG Rules, 2019.

2. Mandatory Documents to Attach with Form B

While Rule 7(1) does not provide an exhaustive list of annexures, best practices and tribunal guidance suggest the following documents should be attached with Form B notice:

a) Copy of the Guarantee Agreement

• Signed contract between the guarantor and the corporate debtor/creditor.

• Clearly specifies the scope of the guarantee, liability, and terms of repayment.

b) Copy of Loan Agreement / Facility Agreement

• Details the original loan/facility granted to the corporate debtor.

• Includes terms, repayment schedule, interest, and default clauses.

c) Any Addendums or Amendments to Agreements

• Copies of any modifications to the original loan or guarantee agreements.

• Proof that the guarantor consented to any amendments or addendums (e.g., signed acknowledgment, consent letters, or board resolutions).

• Ensures enforceability of the amended terms against the guarantor.

d) Record of Default

• Where available, IU (Information Utility) record of default for the corporate debtor.

• Provides authenticated evidence of the default under IBC framework.

e) Statement of Accounts

• Ledger or bank statements evidencing outstanding amounts, overdue payments, or unpaid interest.

• Important note regarding bank account statements:

  1. Period to cover: The statement should show deposits or credits from the date the debt was incurred up to the point of default.

  2. Extent of attachment: Entire statement need not always be attached with the notice if the relevant transactions can be summarized; however, enough information must be included to clearly show the default.

  3. Redaction: Sensitive or unrelated information may be redacted, provided the critical transaction history evidencing the debt and default remains visible.

  4. Purpose: Ensures the guarantor can verify how the outstanding debt arose and reduces procedural objections when filing the application.

f) Demand Notices or Communications (if any)

• Copies of previous demands or notices sent to the corporate debtor, if applicable.

g) Board Resolution/ Authorization 

• Resolution authorizing the creditor to initiate proceedings against the guarantor.

• Ensures procedural compliance and shows authority to issue the Form B notice.

h) Other Supporting Documents

• Any documents that may substantiate the existence and enforceability of the debt, such as invoices, contracts, or correspondence confirming liability. 

3. Mode of Sending Form B Notice

Rule 7(1) requires that Form B notice be served to the personal guarantor, but the PG Rules do not prescribe any mode of service. Check notice clause in guarantee and ensure the notice method complies with the guarantee agreement. Guidance and best practices suggest:

1. Post/ Courier

   • Use speed post or courier.

   • Provides proof of delivery for NCLT submissions.

2. Electronic Communication (Email)

   • Permitted if guarantor’s email address is known and delivery can be verified (e.g., read-receipt).

3. Dual Mode (Recommended)

   • Many practitioners use both courier/post and email to ensure compliance and reduce challenges regarding non-receipt.

Practical Tip: Always retain evidence of dispatch (courier receipts, postal acknowledgment, email confirmations) and mention the method(s) and date of delivery in the notice itself.

4. Practical Tips While Sending Form B Notice

1. Ensure clarity of amounts: Clearly mention the total outstanding liability, including principal, interest, and any charges and attach a computation sheet for the same.

2. Attach IU record if available: Even if not mandatory yet, it strengthens the notice and aligns with IBC best practices.

3. Include addendums/amendments: If the loan or guarantee agreement has been modified, attach proof of guarantor consent to amendments.

4. Attach bank account statements judiciously: Include statements or summaries showing deposits/credits related to the corporate debtor from the date of debt inception. Redact unrelated sensitive information.

5. Check for invocation clause: Verify whether the guarantee requires the creditor to attempt recovery from the corporate debtor before initiating proceedings against the guarantor. (See: State Bank of India vs. Mr. Deepak Kumar Singhania, NCLAT decided on 28 February, 2025)

6. Maintain copies: Retain proof of sending the notice and annexures for later filing with NCLT.

7. Check timelines: Ensure that the notice is sent before filing the application under Rule 7, to comply with procedural requirements.

8. Notice validity: Even if not received, returned, or the guarantor has left the place, the notice will remain valid if sent in accordance with the guarantee agreement (See: Bank of Baroda vs. Shweta Maheshwari, NCLT Delhi decided on 13 June, 2024).

5. Conclusion

Issuing Form B notice under Rule 7(1) of the PG Rules, 2019 is a crucial step in initiating insolvency proceedings against personal guarantors. Attaching comprehensive supporting documents — including guarantee agreements, loan agreements, IU records, statements of accounts, bank account summaries, and any addendums with guarantor consent — ensures:

• Procedural compliance

• Transparency for the guarantor

• Stronger evidentiary support when filing an application under the PG Rules, 2019

Proper documentation at this stage can significantly reduce disputes and streamline the insolvency resolution process.