Supreme Court: IBC Permits Parallel CIRP Against Debtor and Guarantor for Same Debt

The Supreme Court held that the Insolvency and Bankruptcy Code permits initiating parallel corporate insolvency resolution processes (CIRP) against a corporate debtor and its guarantor for the same underlying debt.

The Court observed that separate legal entities can be subjected to independent CIRP proceedings initiated by a financial creditor, as the liability of a guarantor is distinct from that of the principal debtor.

It said that initiating simultaneous CIRPs does not amount to abuse of process where the claims are legally tenable.

The Bench clarified that this interpretation aligns with the statutory framework and legislative intent of the IBC, allowing creditors to pursue their remedies efficiently.