Lawstreet Journal

Concern Raised By IIA Over Amendment In Insolvency And Bankruptcy Code, 2016

Lawstreet Journal 4 Apr 2020 8:34pm

Image courtesy: Lawstreet Journal Executive Concern Raised By IIA Over Amendment In Insolvency And Bankruptcy Code, 2016

The Indian Industries Association (IIA) is an apex representative body of Micro, Small and Medium Enterprises (MSME) that was established in 1985. It is a body responsible for enabling the environment for developing MSMEs in the current competitive industrial scenario. 

A recent notification issued in the wake of the pandemic wherein the government set the minimum default requirement value for triggering insolvency at Rs.1 crore was set to be applicable from 24th March, 2020

Section 4 of Insolvency and Bankruptcy Code, 2016 stated that the prima facie value to file any application under the code would be Rs. 1 Lakh and after the notification, the proviso is ad-verbatim produced below reads, "Provided that the Central Government may, by notification, specify the minimum amount of default of higher value which shall not be more than one crore rupees.”

The step has been considered as a relief factor for MSMEs in this time of disruption caused by the pandemic. One thing to note is that, in the nascent stage, the amount of Rupees One Lakh previously allowed the creditors the liberty to misuse the process of the code being the smaller amount it was in the vantage of a commercial point. 

As reported on 3rd April, 2020, IIA chapter of Uttar Pradesh has raised concern over the amendment in the Insolvency and Bankruptcy Code of 2016. The association has written a letter to PM Narendra Modi, MSME Minister Nitin Gadkari, RBI Governor Shaktkantha Das and SS & DC MSME. 

The letter said, "The Finance Ministry has announced the… Continue Reading...

Tagged: Insolvency and Bankruptcy Code  
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