Corporate Guarantee Liability is "Financial Debt" Under IBC: Supreme Court

The Supreme Court ruled that liabilities from corporate guarantees qualify as "financial debt" under Section 5(8) of the Insolvency and Bankruptcy Code (IBC).

The bench set aside tribunal orders that excluded an SBI-led consortium from the Committee of Creditors in the Reliance Infratel case.

The Court clarified that guarantees securing loans involve the "time value of money," making lenders eligible as financial creditors.

Crucially, the bench held that a creditor’s claim cannot be defeated simply because a guarantee was omitted from financial statements or was insufficiently stamped, as such technical defects are curable.

[State Bank of India v. Doha Bank Q.P.S.C.]