Commercial Undertakings vs Contracts of Guarantee: Deciphering the Enforceability of Promoter Support in Corporate Debt Financing

Introduction : In the event of financial difficulty, there is a critical difference between a commitment to arrange or provide equity and a legally binding guarantee, and lenders will typically look to sponsors or promoters to provide risk-mitigation measures such as third-party guarantees, support agreements, letters of comfort, shortfall undertakings, and non-disposal covenants. This article deals with conditions precedent of a contract of guarantee under the Indian Contract Act, 1872 and...