Suspension of Insolvency and Bankruptcy Code (IBC) Extended till March ’21
The Government of India has recently extended the suspension IBC Code i.e. Insolvency and Bankruptcy Code till 31st March 2021. This has been done to help the businesses to cope up with the difficulties imposed by the COVID-19 pandemic.
- As per the earlier announcement of the finance ministry, IBC Code suspension was till December 25. Thus, the government has extended the suspension before the cutoff date.
- All the defaults that have arisen on or after March 25 will be out of the insolvency proceedings for an entire year.
- As per the experts, more efforts and actions are needed to improve the conditions of corporate sheets stressed due to the impact of COVID-19.
- Because of the IBC suspension, there has been a decline of 85% in the insolvency cases in the September quarter.
- In the first 6 months of the current fiscal year, the resolution plan has been approved for only 42 companies undergoing CIRP (corporate insolvency resolution process), generating Rs 12,600 crore as recovery for financial creditors.
Insolvency and Bankruptcy Code (IBC)
IBC is an insolvency and Bankruptcy law of India that aims to bring together the existing network for creating a single law of insolvency and Bankruptcy. The code provides solutions to all insolvencies which was a very long process before IBC. It was passed in the Lok Sabha in the year 2016 and also received the president’s assent in the same year. The code has 11 schedules and 255 sections.