The Supreme Court on Tuesday held that liabilities arising from corporate guarantees fall within the definition of “financial debt” under the Insolvency and Bankruptcy Code (IBC), 2016 and lenders enforcing such guarantees are entitled to be treated as financial creditors. [State Bank of India v. Doha Bank]
A Bench of Justices PS Narasimha and Alok Aradhe held,
“A liability arising from the corporate guarantee squarely falls within the ambit of financial debt as defined under Section 5(8) of the Code. The amount of any liability in respect of any of the guarantees for money borrowed against the payment of interest is a “financial debt” within Section 5(8) of the Code.”
The case arose…