Claims Under Non-Invoked Corporate Guarantee Has To Be Admitted Under I&B Code

In a landmark judgment¹, National Company Law Appellate Tribunal ("NCLAT") settled law under Insolvency and Bankruptcy Code 2016 ("IBC") in respect of claims arising out of counter corporate guarantee and non-invoked guarantee.

IBC mandates Resolution Professionals ("RP") to make a public announcement, requesting creditors of corporate debtor to raise claims against the debtor immediately after admission of Corporate Insolvency Resolution Process ("CIRP").

In the current matter, NCLAT clubbed two appeals, which are preferred: (i) by Export Import Bank of India or Exim Bank relates to Corporate Insolvency Resolution Process initiated against JEKPL Private Limited; and (ii) by Axis Bank Limited relates to Corporate Insolvency Resolution Process against EduSmart Services Private Limited.