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The Central Government has notified the Insolvency and Bankruptcy Code (Amendment) Ordinance, 2020 to suspend Sections 7, 9 and 10 of the Insolevncy and Bankruptcy Code, 2016 on account of COVID-19.
The Ordinance has introduced new Section 10A to suspend initiation of corporate insolvency resolution process.
In view of the new Section, no new insolvency proceedings can be initiated for defaults arising on or after March 25, 2020 for a period of six months or such further period, not exceeding one year.
Section 66 of the Code has also been amended and reads as follows:
Last month, as part of the "Aatmanirbhar Bharat" economic package for structural reforms across sectors, Union Finance Minister, Nirmala Sitharaman had announced that COVID-19 related debts shall not be included in the category of default under IBC.
She had also announced that insolvency proceedings shall also remain suspended for upto 1 year, depending on the situation of the pandemic.
Read the Ordinance: