Threshold of default under Section 4, IBC for initiation of insolvency proceedings raised to Rs 1 crore [Read Notification]
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Threshold of default under Section 4, IBC for initiation of insolvency proceedings raised to Rs 1 crore [Read Notification]

Bar & Bench

The Central Government has notified a raise in the threshold of default under Section 4 of the Insolvency and Bankruptcy Code, 2016 to Rs 1 crore for the initiation of insolvency proceedings under the Code.

The Gazette notification issued to this effect states,

"In exercise of the powers conferred by the proviso to section 4 of the Insolvency and Bankruptcy Code, 2016 (31 of 2016), the Central Government hereby specifies one crore rupees as the minimum amount of default for the purposes of the said section."
Government Notification

The earlier threshold of default had stood at Rs 1 lakh.

The raise in threshold will by and large prevent triggering of insolvency proceedings against MSMEs.

The measure was announced this afternoon by Finance Minister Nirmala Sitharaman while speaking of various relief-oriented steps being taken by the Government in view of the lockdown brought about in the country following the spread of the Novel Coronavirus (COVID-19).

Gazette Notification.pdf
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