The NCLAT has permitted a financial claim on an uninvoked corporate guarantee during the Corporate Insolvency Resolution Process (CIRP), affirming that the Resolution Professional cannot unilaterally reject valid claims. This reinforces the security of corporate guarantees in insolvency proceedings.
NCLAT Rules on Claims Related to Corporate Guarantees in CIRP
In a significant ruling, the National Company Law Appellate Tribunal (NCLAT) has allowed a claim amounting to ₹209.96 crore made by L&T Finance on an uninvoked corporate guarantee during the Corporate Insolvency Resolution Process (CIRP). The Tribunal held that the Resolution Professional cannot reject a claim outright and must carefully evaluate its validity.
This ruling establishes an important precedent regarding the treatment of corporate guarantees in insolvency scenarios. The NCLAT emphasized that just because a corporate guarantee has not been invoked does not diminish its value and thus should be treated with due consideration during the resolution process.
By upholding this claim, the NCLAT reinforces the reliance on corporate guarantees as essential securities for creditors. Legal professionals should note this decision, as it could impact how corporate guarantees are interpreted and enforced in future insolvency cases.
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