The Supreme Court has, through a recent decision (2026 INSC 201), now conclusively settled a long-standing controversy under the Insolvency and Bankruptcy Code, 2016 (“IBC”) whether a financial creditor can initiate CIRP against both a principal borrower and its guarantor for the same debt.
For a while, tribunals were taking a restrictive view. Based on Vishnu Kumar Agarwal v. Piramal Enterprises1, the approach was that once CIRP is admitted against one entity, a second proceeding for the same debt should not be allowed. This created real practical problems for lenders, especially in structured financings where guarantees are central. This judgment corrects that position and brings the law back in line with commercial reality.
