New Delhi, April 29 -- The Supreme Court has held that a corporate guarantee furnished by a company to secure another companys borrowing, when backed by arrangements such as hypothecation, qualifies as a financial debt under the Insolvency and Bankruptcy Code, 2016 (IBC).
A Bench comprising Justices Pamidighantam Sri Narasimha and Alok Aradhe delivered the ruling while hearing a dispute involving a State Bank of India (SBI)-led consortium and Reliance Infratel Ltd (RITL).
The consortium had sought recognition of its claims in the corporate insolvency resolution process (CIRP) of RITL, the corporate debtor, arguing that the company had issued guarantees for loans extended to group firms such as Reliance Communications (RCOM) and Reliance...