Introduction

The Supreme Court in ICICI Bank v. Era Infrastructure (India) & Ors. (ICICI Bank) permitted creditor to initiate corporate insolvency resolution proceedings (CIRP) against both Principal Debtor and guarantor under Section 7 of Insolvency and Bankruptcy Code, 2016 (the Code). On the face, the ruling appears complete but under current lies deep structural ramification of it. The court resolved the question of permissibility but it reveals a significant gap. Court left one harder question unanswered: the parallel proceedings can be initiated, but what if both proceedings conclude with conflicting resolution plans (RPs)?

This piece critiques the demarcation of “proceedings” by the court on the grounds that it may wrongly produces two different plans, different Committee of Creditors (CoC) and two resolution professionals. Thereby this piece first, highlight the doctrinal shift taken place in ICICI Bank, second the coordination gap it has created and third, it proposes certain reforms to bridge this gap.

ICICI Bank: Permissibility Without a Framework

The National Company Law Appellant Tribunal (NCLAT) addressed this issue in Vishnu Kumar Agarwal v Piramal Enterprises Ltd (Primal) where the silence was read as a prohibition. The tribunal was of the opinion ‘one debt one proceeding’. It can be correlated to the Doctrine of Election, which states that the aggrieved has to choose one remedy in an event multiple remedies are available. However, the NCLAT in Arenal Energy Ventures case provided the opposite observation. The tribunal confirmed that two proceedings can occur parallelly, but the corporate creditor cannot recover more than the debt.

In the ICICI Bank, the Court relying on Section 60(2) of IBC and Section 128 of Indian Contract Act, confirmed that liability of guarantor is co-extensive to that of principal debtor overruling the Primal. The co-extensiveness of guarantor liability is settled by law which IBC does not interfere with. The guarantor steps into the shoe of corporate debtor once debt is paid following the Principle of Subrogation Void. Restricting to elect one would undermine the credit market that IBC aims to rehabilitate. Thereby, the Doctrine of Election was rejected at this critical point.

Two CIRPs, Two Plans, No Reconciliation Mechanism

When parallel proceedings run concurrently, not only the RPs can be different but also the proceedings differ. There are different resolution professionals, Committee of creditors (CoC), and RPs. This creates two different outcomes of same debt taken by same debtor which led to inconsistency.

The court referred to Regulation 12A and Regulation 14 of the CIRP Regulations, which permits RPs and creditors to revise their claims. We argue this is insufficient to address the concern. This regulation only deals with setting the limits for creditor which shall not exceed what is being owned by them. They did not deal with coordination between two separate CoC, neither they prevent them to submit two different plans which are mutually incompatible.

Assuming, two parallel proceedings take place one against Era Infrastructure (guarantor) and other against Hyderabad Ring Road Project Private Limited (principal borrower). Plan A RP approved by CoC declares the repayment of 50 paise treating guarantee as extinguished. Plan B RP declares the repayment of 70 paise treating that guarantee exists. Now, the matter come beyond NCLT. The tribunal has no power under Regulation 14 to reconcile two different plans. It does not adjust the legal treatment of guarantee between two separate structures.

The court also evoked the principle of clean slate. This principle states that no resolution applicant acquires prior liabilities of corporate debtor. This was enacted to make sure that no prejudice is caused to borrower’s CIRP. These arguments are not disputed. Rather, the court’s method of invocation of this principle reveals lacunae. If two RPs run parallelly, subsequent plan in borrower’s CIRP may treat same guarantee as subsisting unlike the first plan which has extinguished the same. The principle which was designed to give certainty to resolution applicant leads to an uncertain result. Each inherits the legal uncertainty in two ongoing plans, which reflects how the court has only employed one side of doctrine thereby leaving deeper coordination unanswered.

Conceptual Disconnect between Liability and Process

In ICICI Bank, at its core lies a point for the Court is a fundamental assertion – the liability of the guarantor stands co-extensive with the principal debtor under Section 128 of the Indian Contract Act, 1872. Insofar as the issue is concerned with contractual standpoint, this is not in question. Any creditor is at liberty to take proceed against either the obligor (i.e. the principal debtor and the surety) or both until the debt is paid off. However, the challenge arises once the discussion shifts beyond liability to the insolvency process.

While the purpose of the code is the enforceability of claims, it also goes one step ahead by restructuring them, and within the very framework, the principles of Contract Act cannot be applicable to the Code stricto sensu. Unlike contract law, insolvency law requires a coordinated effort to maximise stakeholder interest through consolidation. This line of differentiation has been established and reiterated in numerous cases by the Apex Court, including Swiss Ribbons (P) Ltd. v. Union of India and Committee of Creditors of Essar Steel India Ltd. v. Satish Kumar Gupta, where the Supreme Court has clarified that the insolvency code forms an independent legal framework which cannot be sized down to the conventional concept of contracts alone, and the process under cannot be made a purely recovery proceeding.

As evident from the preamble of the code itself, the purpose of the insolvency code is to consolidate all debts, and allowing parallel insolvency proceedings seems rather counterintuitive. This contradiction would be apparent when the established view of insolvency as a collective process taken into account and allowing for simultaneous CIRPs could mean undermining the effective consolidation of rights and interests of the stakeholders.

Reckoning with this, the acceptance of parallel CIRPs reflects a conceptual dissonance. Moreover, such allowance reveals another disconnect, i.e. an uncoordinated parallel proceeding poses a significant risk with regards to the purpose of asset maximisation of the corporate guarantor. It is conceded here because fragmented and inconsistent resolutions in parallel CIRP  processes makes it difficult to consolidate all claims concerning the financially interdependent assets, thereby risks undermining the potential value to be recovered, which can hamper the creditors interest.

Additionally, the presence of common creditors in multiple Committees of Creditors (CoCs) can raise a question on the neutrality of process itself, whereby the same financial creditor taking part parallelly in various Committees of Creditors may have a significantly larger leverage and may abuse this position by favouring one resolution attempt over another. Another concern that lies is that conducting simultaneous CIRP can lead to inefficiencies and create additional costs and importantly can affect the time bound nature of insolvency proceedings, which is presently stipulated at 180 days from the date of admission.

It is relevant here to make this distinction that as co-extensive liability might hold good to justify multiple claims, but it does not necessarily justify the multiplicity of insolvency proceedings.

asset reconciliation in parallel proceedings but fails to solve the plan conflict problem.

A Blueprint for Coordination

Squarely recognising the possibility of parallel CIRPs, the Court restrained itself from providing guiding principles in this regard, even though the issue clearly addressed the instant case leaving a big structural question unanswered and unguided. To address this left vacuum, there is  requirement for  implementation of coordination mechanisms across parallel CIRP processes. These mechanisms should include effective communication between resolution professionals, coordination regarding the decisions made by Committees of Creditors, and facilitation of disclosure with respect to claims in parallel proceedings, practically through coordination report.

Such a coordinative measure will reduce inconsistencies in the resolution plans obtained in parallel proceedings. Moreover, coordination across parallel cases would allow to maximize value realization as well as improve the efficiency of the entire procedure and additionally such an approach would ensure the increased role of creditors in insolvency processes that would help to prevent inconsistencies and fragmentation in their decision across the proceedings thereby enhancing the resolution process. This shall be understood by the new amendment in the code.

IBC (Amendment) Act, 2026

IBC (Amendment) Act, 2026 introduced Chapter VA and Section 59A which empower government to frames rules which may include group insolvency, including joint CoC, a common RP and coordinated proceedings. This addresses the case where two or more Corporate Debtors are connected with substantive ownership and voting rights of 26% or more.

The authors doubt that borrower and guarantors are not necessarily governed by ownership or control. They may be binding by contractual obligations. This clearly showcase how the provision outcast them from the coverage of ‘group’. Thereby, the ambit of this provision must be broadened to include this scenario as well within the regulatory framework of the Code.  

Conclusion

ICICI Bank case represents a fundamental doctrinal shift by allowing parallel CIRPs, which brings the insolvency regime closer to co-extensiveness. The concern here, however, is that while creditor rights have been extended in a significant way, there has been no complementary framework adopted to achieve this permissiveness. It is evident from the discussion above that parallelism creates the risk of fragmentation and dilution of the collective character of insolvency. Nonetheless, recent legislative development marks a significant leap to fill the vacuum in this direction.