TWENTY SIX YEARS OF THOUGHT LEADERSHIP IN INSOLVENCY

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Bill to amend Bankruptcy Code tabled in Rajya Sabha

By EDITORIAL BOARD INSOL INDIA Posted On : September 22, 2020

The IBC amendment bill was presented in the Rajya Sabha.  The Bill seeks to amend the Code keeping in vew the hardship created by the Covid-19 pandemic.

  • As per the Bill, the suspension of the code is initially for a period of six months or such further period, not exceeding one year from 25 March, 2020.
     
  • The suspension of IBC was a measure originally announced by the Finance Minister, Mrs. Nirmala Sitharaman, on 17 May, 2020.
As per the Bill, the suspension of the code is initially for a period of six months or such further period, not exceeding one year from 25 March, 2020. This supports recovery of firms from the financial stress during the pandemic without facing immediate threat of being pushed to insolvency proceedings, the statement noted. There is no material change in the provisions contained in the Bill compared to the Ordinance.

Finance minister Nirmala Sitharaman said in a statement while tabling the IBC (Second Amendment) Bill 2020 in the upper house of Parliament that corporate insolvency resolution under the Code was temporarily suspended to provide relief to companies hit by the Covid-19 pandemic.
 
While pausing fresh bankruptcy proceedings is considered a breather for many companies, it deprives lenders the opportunity to restructure certain companies which may be beyond redemption. The idea is to save viable firms even if it comes at the cost of keeping unviable ones alive during the period.