Bankruptcy deadlines relaxed: IBC activity falling behind during lockdown can be finished later

By: |
Updated: March 30, 2020 11:25:59 AM

If an IBC activity was to be carried out during the 21 days of lockdown announced by the centre, it can be completed after lockdown.

IBC deadline extended, insolvency and bankruptcy code, ibbi, insolvency and bankruptcy board of inida, threshold limit increasedThe decision is taken after considering that it is difficult for the insolvency professionals to continue to conduct the process and for members of the committee of creditors to attend the meetings.

Insolvency and Bankruptcy Board of India (IBBI) has announced to exclude the period of lockdown from any IBC activity proceedings. If an IBC activity was to be carried out during the 21 days of lockdown announced by the centre, it can be dealt after 15 April 2020. The decision is taken after considering the difficulty for the insolvency professionals to continue to conduct the process, for members of the committee of creditors to attend the meetings, and for prospective resolution applicants to prepare and submit resolution plans, during the period of lockdown. Thus, it may be difficult to complete various activities during a corporate insolvency resolution process within the specified timeline in the CIRP Regulations.

“To address this difficulty, the IBBI amended the CIRP Regulations to provide that the period of lockdown imposed by the Central Government in the wake of COVID-19 outbreak shall not be counted for the purposes of the time-line for any activity that could not be completed due to the lockdown, in relation to a corporate insolvency resolution process,” IBBI said in a statement. This would, however, be subject to the overall time-limit provided in the Code, it added.

Also Read | Covid-19 impact: Centre’s FY21 fiscal deficit seen at 5% or higher

In an earlier announcement, Finance Minister Nirmala Sitharaman had announced to raise the threshold limit to initiate Insolvency and Bankruptcy proceeding to Rs 1 crore from Rs 1 lakh. The decision was aimed at giving relief to small and medium enterprises that are struggling through the tough times of slowdown and lockdown.

Meanwhile, businesses and industries have come to a standstill due to the 21 days lockdown and zero footfall in the market. While the demand has floored in the domestic and international markets, disruptions in the movement of goods have made it difficult for businesses to carry on their operations. Many SMEs were already running into losses due to a longer-than-expected slowdown in India, and now the complete lockdown due to the Covid-19 pandemic has shut many shops.

Do you know What is Cash Reserve Ratio (CRR), Finance Bill, Fiscal Policy in India, Expenditure Budget, Customs Duty? FE Knowledge Desk explains each of these and more in detail at Financial Express Explained. Also get Live BSE/NSE Stock Prices, latest NAV of Mutual Funds, Best equity funds, Top Gainers, Top Losers on Financial Express. Don’t forget to try our free Income Tax Calculator tool.

Financial Express is now on Telegram. Click here to join our channel and stay updated with the latest Biz news and updates.

Next Stories
1After Modi’s economic package, Nitin Gadkari asks states to chip in Rs 20 lakh cr more to fight coronavirus
2Migrant workers return to job market: Employment condition may soon revive as job hunt begins
3India initiates anti-dumping probe into imports of polyester yarn from 4 countries