Advocate Sushila
INDIAN FINANCE MINISTER ANNOUNCES CHANGES IN INSOLVENCY AND BANKRUPTCY CODE DUE TO CORONAVIRUS PANDEMIC

INDIAN FINANCE MINISTER ANNOUNCES CHANGES IN INSOLVENCY AND BANKRUPTCY CODE DUE TO CORONAVIRUS PANDEMIC

The Coronavirus has caused global turmoil putting the economies of several countries in a crisis. Desperate times call for desperate measures, compelling the Finance Minister to take measures protecting the economy as best as it can. One of the #quickmeasures taken by the #FinanceMinister is to curtail small and medium enterprises going under due to the pandemic. The Finance Minister has, therefore, made changes in the Insolvency and Bankruptcy laws to #protectseveralbusinesses from going into #bankruptcy.

 

The following are the changes initiated by the Finance Ministry:

 

1)            The Government has recently raised the #threshold under Section 4 of the Insolvency and Bankruptcy Code, 2016 as amended thereof (IBC) for #invokinginsolvencyproceedings to Rs 1 Crore from the current Rs 1 Lakh limit, on 24.03.2020.

 

2)            The Government is considering #suspendingtheprocessofinitiation of corporate insolvency resolution proceedings (CIRP) against corporate debtors, if the Corona Pandemic continues beyond 30.04.2020, under the following provisions of IBC, for a period of six months. This measure is probably being considered so as to stop companies at large from being forced into insolvency proceedings due to force majeure causes of default.

 

3)            As part of the relief measures, the Finance Minister has also stated no additional fee will be charged for late filing during a moratorium period from 01.04.2020 to 30.09.2020. In respect of any documents to be filed in the Ministry of Corporate Affairs (MCA) Registry irrespective of its due date.

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