Supreme Court Upholds Dual CIRP Proceedings for Debtors and Guarantors
The Supreme Court ruled that simultaneous insolvency proceedings can be initiated against both a principal debtor and its guarantor for the same debt under the Insolvency and Bankruptcy Code. This verdict emphasizes the co-extensive liability principle and allows creditors to pursue parallel actions without waiting for one process to conclude.
- Country:
- India
The Supreme Court has affirmed that simultaneous insolvency proceedings are permissible against both a principal debtor and its corporate guarantor for the same debt.
A bench of Justices Dipankar Datta and Augustine George Masih determined that the Insolvency and Bankruptcy Code (IBC) does not prohibit financial creditors from initiating parallel actions.
The ruling emphasizes that a creditor's attempt to secure payment through guarantees must be respected, without waiting for separate insolvency processes to conclude.
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