individual insolvency

In case of death of the sole proprietor, his legal heirs can legally continue the business but other legal compliance, either fresh firm will form or legal heirs will replace.

In the case of a personal loan, which is an unsecured loan, the lenders cannot ask the legal heirs or the surviving members of the dead borrower to pay the outstanding amount. Such loans do not involve any collateral; hence, the bank cannot seize and sell any asset of the borrower to recover the amount.

As per Section 29(1)(a) where the business is being discontinued due to death of proprietor the registration is liable to be cancelled.

Filing an insolvency petition will depend.

Please ref this article

https://primelegal.in/2021/08/08/are-legal-heirs-of-deceased-sole-proprietor-obligated-to-settle-his-unsecured-debts/