Insights
COVID-19 updates: Insolvency & Bankruptcy Code
May 18, 2020As part of the last tranche of announcements under the Aatma Nirbhar Bharat Abhiyan, on 17 May 2020, the Finance Minister announced certain measures related to the Insolvency and Bankruptcy Code, 2016 (“IBC”) to enhance ease of doing business.
The measures announced include:
- Suspension of fresh initiation of proceedings under the IBC for up to one year: The Finance Minister reiterated the Government’s intention to suspend fresh initiation of insolvency proceedings under the IBC for a period of up to one year. This is intended to ensure that businesses are not pushed into the insolvency resolution proceedings prematurely during a period of macro-economic stress, and appears to be complementary to RBI’s announcement permitting banks to grant moratoria on repayment of debts for a fixed period. This measure is also intended to help ‘flatten the bankruptcy curve’ so that institutional infrastructure, particularly the National Company Law Tribunal is not overwhelmed with fresh cases.
