Action under Section 7 IBC will lie against guarantor which is a corporate person though principal borrower is not a corporate person: SC

We find no substance in the argument that since loan was offered to a proprietary firm (not a corporate person), action under S. 7 cannot lie against the corporate person though it had offered guarantee, the Court held.
Action under Section 7 IBC will lie against guarantor which is a corporate person though principal borrower is not a corporate person: SC
Justices AM Khanwilkar, BR Gavai and Krishna Murari

Action to initiate Corporate Insolvency Resolution Process under Section 7 of the Insolvency and Bankruptcy Code, 2016 (IBC) can be initiated by the financial creditor (Bank) against a corporate person concerning guarantee offered by it in respect of a loan account of the principal borrower, who had committed default, even if the principal borrower is not a 'corporate person', the Supreme Court held (Laxmi Pat Surana v. Union Bank of India).

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