Dispute Resolution & ADR Newsletter - January 2026

A promoter's undertaking to infuse funds to meet financial covenants does not amount to a corporate guarantee under the IBC

UV Asset Reconstruction Co Ltd v. Electrosteel Castings Ltd

Supreme Court of India | 2026 SCC OnLine SC 26

This judgment clearly delineates commercial support commitments from legally enforceable guarantees. Lenders should therefore avoid relying on broadly worded undertakings and must insist on clearly drafted guarantee documents if promoter liability is commercially important. The Court held that a promoter's undertaking to infuse funds to meet financial covenants does not amount to a corporate guarantee under Indian law. At the same time, the Court reaBirmed that the liability of a valid security provider or guarantor is not automatically extinguished merely because the borrower's resolution plan is approved. For investors and financial institutions, this means recovery assessments should consider that security may still be enforced