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NEW DELHI: The Supreme Court on Friday ruled that a bank can initiate proceedings under the Insolvency and Bankruptcy Code (IBC) against a corporate guarantor if the principal borrower defaults on repayment of loans and the debt is declared nonperforming asset (NPA).
A bench of Justices A M Khanwilkar, B R Gavai and Krishna Murari rejected the argument that as the principal borrower was not a corporate person, the financial creditor could not have invoked remedy of insolvency resolution proceedings under Section 7 of the IBC against the corporate person, who had merely offered guarantee for such loan account.
That action can still proceed against the guarantor being a corporate debtor, consequent to the default c…
Read the full article at: https://timesofindia.indiatimes.com/business/india-business/sc-corporate-guarantor-can-face-insolvency-action/articleshow/81719308.cms
