Corporate guarantor liability under insolvency law allows parallel section 7 proceedings despite CIRP against the principal borrower.

A financial creditor may maintain a section 7 insolvency application against a corporate guarantor even where CIRP has already been initiated against the principal borrower for the same debt and default. The guarantor's liability is co-extensive with that of the principal borrower, and default by the borrower triggers the guarantor's liability unless the guarantee contract provides otherwise. At the admission stage, the adjudicating authority examines only the existence of debt and default, not the merits of the recovery dispute or quantum objections. The simultaneous proceeding against the corporate guarantor was therefore maintainable, and admission of the application was upheld.

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Issues: Whether a financial creditor can initiate and maintain a section 7 insolvency proceeding against a corporate guarantor when CIRP has already been initiated against the principal borrower for the same debt and default, and whether the guarantor's liability under the guarantee supports admission of the application.

Analysis: The liability of a guarantor is co-extensive with that of the principal borrower, and a corporate guarantor becomes liable upon default by the principal borrower unless the contract provides otherwise. The Code treats a corporate person who owes a debt as a corporate debtor, and a financial creditor is entitled to proceed against a person to whom a financial debt is owed, including liability arising from a guarantee. The existence of CIRP against the principal borrower does not, by itself, bar a separate section 7 proceeding against the corporate guarantor. The adjudicating authority's role at the admission stage is limited to examining the existence of debt and default, not to adjudicating the merits of the underlying recovery dispute or the quantum objections urged by the guarantor.

Conclusion: The simultaneous section 7 proceeding against the corporate guarantor was maintainable, and the admission of the application was upheld.

Ratio Decidendi: A financial creditor may pursue a section 7 insolvency proceeding against a corporate guarantor independently of CIRP against the principal borrower, because the guarantor's liability is co-extensive and default by the principal borrower triggers the guarantor's own liability under the Code and the contract of guarantee.

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