The NCLT initiated Corporate Insolvency Resolution Process (CIRP) against a corporate debtor, confirming that a guarantor's liability is on par with the borrower's. An interim resolution professional was appointed, and a moratorium restricting recovery actions was imposed.
Guarantor’s Liability Co‑Extensive with Borrower
The National Company Law Tribunal (NCLT) has admitted a Section 7 petition under the Insolvency and Bankruptcy Code (IBC), initiating Corporate Insolvency Resolution Process (CIRP) against a corporate debtor. This decision underscores the legal understanding that a guarantor’s liability is co-extensive with that of the borrower.
In its order, the Tribunal appointed Pankaj Bhattad as the Interim Resolution Professional (IRP) and imposed a moratorium under Section 14 of the IBC. This moratorium effectively restrains all recovery actions against the corporate debtor, safeguarding its assets during the resolution process.
This ruling clarifies the liabilities of guarantors in insolvency proceedings, reaffirming their financial responsibilities. Practitioners should note the implications of this judgment, especially regarding guarantor obligations in future insolvency cases.
Citations
- NCLT Order (2026)
