NCLAT: Bank guarantees (including advance bank guarantees) can be invoked even during the period of moratorium under Section 14 of the IBC
In the recent decision, the National Company Law Appellate Tribunal (“NCLAT”) has held that an irrevocable and unconditional bank guarantee can be invoked even during moratorium period in view of the amended provision under Section 14 (3) (b) of the Insolvency and Bankruptcy Code, 2016 (“IBC”). This decision clarifies (though not explicitly) that the inapplicability of moratorium also extends to advance bank guarantees also since the provision excludes the broad category of ‘contracts of surety’.
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