The National Company Law Appellate Tribunal (NCLAT) has ruled that a personal guarantors right to subrogation against a corporate debtor can be taken away in a resolution plan under the Insolvency and Bankruptcy Code (IBC).
Simply put, a personal guarantor has no right to step into the shoes of a creditor against the corporate debtor (company going through IBC) in case of a resolution plan under the IBC.
This ruling came in an appeal filed by Lalit Mishra & Ors, the promoters of Sharon Bio Medicine Ltd (corporate debtor), against the February 28 order of NCLAT, Mumbai.
Subrogation refers to the substitution of one person or group by another in respect of debt or insurance claim, accompanied by the transfer of any associated rights and dut…
Read the full article at: https://www.thehindubusinessline.com/money-and-banking/in-a-resolution-plan-under-ibc-personal-guarantors-cant-step-into-creditors-shoes/article25821235.ece