bankruptcy

Ordinance to suspend initiation of corporate insolvency resolution process

Ordinance to suspend initiation of corporate insolvency resolution process
 
The President of India has promulgated the Insolvency and Bankruptcy Code (Amendment) Ordinance 2020.
 
As per the Ordinance, COVID-19 pandemic has impacted business, financial markets and economy and created uncertainty and stress for business. Further the Ordinance acknowledges that due to the nation wide lockdown has also disrupted  the normal business operation.
 
As a result a need was felt to  suspend under sections 7, 9 and 10 of the Insolvency and Bankruptcy Code, 2016 to prevent corporate persons which are experiencing distress on account of unprecedented situation, being pushed into insolvency proceedings under the said Code for some time.
 

Section 10A to the IBC to suspend initiation of corporate insolvency resolution process

 
The Ordinance has inserted a new Section 10A to the IBC to suspend initiation of corporate insolvency resolution process.

As per the inserted section 10A, no application for initiation of corporate insolvency resolution process of a corporate debtor can be filed, for any default arising on or after 25th March, 2020 for a period of six months or such further period, not exceeding one year from such date, as may be notified in this behalf.

Also, no application can ever be filed for initiation of corporate insolvency resolution process of a corporate debtor for the said default occurring during the above period.  

However, the provisions of section 10A shall not apply to any default committed under the said sections before 25th March, 2020.

Download Ordinance Click Here >>

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