Thursday , October 21 2021

Modi government amends insolvency law, action will not be taken for 6 months in new cases of default

DelhiThe Narendra Modi (Narendra Modi) government of the Center has issued an ordinance to amend the Insolvency and Bankruptcy Code-IBC. Under this, insolvency action will not be initiated in new cases of failure to pay debts during the Coronavirus Epidemic. The lockdown is in force in the country from 25 March to the prevention of Coronavirus.

 

The companies are expected to get a big relief. From
March 25 onwards, insolvency action will not be initiated in new cases of default or default in loan payments. The move is expected to bring major relief to companies, as economic activity has been badly affected by the Coronavirus epidemic and subsequent nationwide bandh. The ordinance states that insolvency action cannot be taken in six months or beyond (not exceeding one year) in any case of default on or after March 25, 2020. It states that an application cannot be made against a corporate borrower under the Corporate Insolvency Resolution Procedure (CIRP) during the above period. The CIRP process has been suspended for this period.

7, 9, and 10 will not be applicable for a period of six months. Three sections
of the Code. Three sections of the Code. 7, 9, and 10 will not be applicable for a period of six months. In this context, a new section ’10A’ has been inserted in the IBC. Sections 7 and 9 relate to the commencement of insolvency proceedings by financial and operational lenders. Section 10 deals with corporate applicants. Under IBC, any entity can apply for insolvency action even if there is a one-day default in debt payment by a company. The minimum limit for this is one crore rupees. Earlier this limit was one lakh rupees. Finance and Corporate Affairs Minister Nirmala Sitharaman said on May 17 that the government would provide several concessions under the Insolvency Act. Under this, insolvency action will not be initiated in new cases for up to one year.

Check Also

Connaught Place should be no-hawking zone: Delhi HC

Image Source : PTI Connaught Place should be no-hawking zone: Delhi HC Coming down heavily ...