Liability Of Corporate Debtor Not Discharged By Release Of Guarantors' Liability If Bank Preserves Right To Proceed Under IBC: NCLAT

The NCLAT (National Company Law Appellate Tribunal) has ruled that the liability of a Corporate Debtor is not discharged by the release of guarantors after a One-Time Settlement (OTS) if the bank preserved its right to proceed under IBC. This clarifies that the principal debtor's liability remains unless explicitly waived. Even if guarantors are released through an OTS, if the bank specifically reserves its rights against the corporate debtor in the settlement agreement, it can still initiate insolvency proceedings, ensuring full recovery of dues.