Limitation for corporate guarantor insolvency can extend through principal borrower acknowledgments where the guarantee is co-extensive.

In insolvency proceedings against a corporate guarantor, limitation may be extended where the guarantee deed makes liability co-extensive with the principal borrower and the instrument contemplates binding acknowledgments. A valid acknowledgment or settlement proposal by the principal borrower within the limitation period can therefore preserve the debt against the guarantor. Applying that principle on the facts, the debt was treated as subsisting and the section 7 application was held to be within time and maintainable.

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Issues: Whether the section 7 application against the corporate guarantor was barred by limitation and therefore liable to be rejected.

Analysis: The application was examined in the light of the guarantor's liability under the guarantee deed, the acknowledgments and settlement proposals made by the principal borrower, and the legal position that the guarantor's liability is co-extensive with that of the principal borrower. The Court relied on the principle that a valid acknowledgment within the limitation period extends limitation, and that acknowledgments by the principal borrower can bind the guarantor where the guarantee so provides. On the facts, the debt was treated as subsisting and the application was found to be within time.

Conclusion: The plea of limitation failed and the section 7 application against the corporate guarantor was maintainable.

Ratio Decidendi: In insolvency proceedings against a corporate guarantor, a valid acknowledgment of liability by the principal borrower within the limitation period can extend limitation against the guarantor where the guarantor's liability is co-extensive and the guarantee instrument so contemplates.

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