In Brief
A financial creditor granted a loan of Rs. 100 crores to Gujarat Hydrocarbon and Power SEZ Limited (the principal borrower), secured by a corporate guarantee from Assam Company India Limited (the guarantor). When the principal borrower defaulted, the creditor initiated insolvency proceedings against the guarantor, whose resolution plan provided only Rs. 38.87 crores to the creditor as full and final settlement of the guarantor's Rs. 241.27 crores liability. The creditor then filed a second insolvency petition against the principal borrower for the remaining Rs. 1,428 crores. The Supreme Court held that the creditor can pursue both the guarantor and the principal borrower separately and simultaneously under the Insolvency and Bankruptcy Code; the principal borrower remains liable for the balance amount after deducting what was recovered from the guarantor, and subsidiary assets cannot be included in the parent company's insolvency estate.
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