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.
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.
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.
The threshold limit for defaulting and hence triggering of the corporate insolvency resolution process under the IBC increased from Rs 1 lakh to Rs 1 crore. pic.twitter.com/WNwtAAdjMX
— Insolvency and Bankruptcy Board of India (@IBBIlive) March 25, 2020
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.