Answer By law4u team
No, a creditor cannot initiate bankruptcy/insolvency proceedings against a guarantor under the Insolvency and Bankruptcy Code (IBC). The IBC only provides for the initiation of bankruptcy/insolvency proceedings against a corporate debtor (company) or an individual debtor. A guarantor is a person who guarantees the payment of a debt or the fulfillment of an obligation by another person (the principal debtor). If the principal debtor defaults on the debt or obligation, the creditor can initiate recovery proceedings against the guarantor to recover the amount owed. However, the recovery proceedings against a guarantor are governed by the provisions of the Indian Contract Act and the Limitation Act, and not by the IBC. The creditor may file a civil suit against the guarantor to recover the amount owed, and may also initiate proceedings under the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act (SARFAESI Act) if the debt is secured by collateral. In summary, a creditor cannot initiate bankruptcy/insolvency proceedings against a guarantor under the IBC. The recovery proceedings against a guarantor are governed by the provisions of the Indian Contract Act and the Limitation Act, and the creditor may file a civil suit or initiate proceedings under the SARFAESI Act to recover the amount owed.
