CIRP can be initiated against corporate debtor without proceeding against principal borrower

Last updated: 28 October 2022
Quick Summary
The Supreme Court has clarified that a Corporate Insolvency Resolution Process (CIRP) can be initiated against a corporate debtor who has provided a guarantee, even if the principal borrower is not a corporate entity. The Court affirmed that the liability of the guarantor is co-extensive with the principal borrower, meaning the financial creditor can proceed directly against the guarantor upon default. This decision upholds the broad scope of the Insolvency and Bankruptcy Code, 2016.

Court :
Supreme Court of India

Brief :
The Corporate Insolvency Resolution Process("CIRP") can be initiated against the corporate debtor without proceeding against the principal borrower.

Citation :
Civil Appeal No. 9286 of 2019

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