The Supreme Court of India has held that liabilities arising from corporate guarantees squarely fall within the ambit of “financial debt” under the Insolvency and Bankruptcy Code (IBC), 2016. A Bench comprising Justice Pamidighantam Sri Narasimha and Justice Alok Aradhe set aside the concurrent findings of the NCLT and NCLAT, which had previously derecognized the SBI Consortium as financial creditors of Reliance Infratel Limited (RITL).
The Court emphasized that a guarantor incurs a coextensive liability with the principal borrower and that technical objections regarding stamping, timing, or non-disclosure in financial statements cannot legitimately defeat the status of a “financial creditor” if the debt involves disbursal…