A financial creditor can seek to initiate insolvency process against a corporate guarantor of a company first, instead of the company itself in case the guarantee fails, the National Company Law Appellate Tribunal (NCLAT) has held.
Corporate insolvency resolution process, thus, can go ahead against the guarantor under section 7 of the Insolvency and Bankruptcy Act (IBC) even without having proceeded and exhausted against all legal remedies against the principal debtor, the NCLAT said.
This, the appellate tribunal said, can be done as any corporate guarantee given by a parent company for the subsidiary becomes a debt as soon it is invoked and subsequently the corporate guarantor be…
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