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Some Relief To Firms As Govt Extends IBC Suspension For 3 Months
On Thursday, the central government extended the suspension on initiating bankruptcy proceedings under Insolvency and Bankruptcy Code (IBC) against firms for three more months till 24 December.
The Ordinance introduced in June suspending insolvency proceedings against any default arising for at least 6 months from 25 March (day of total lockdown) due to COVID-19, avoiding companies from being forced into insolvency, ended on 24 September.
"In exercise of the powers conferred by section 10A of the Insolvency and Bankruptcy Code, 2016, the Central Government has extended the suspension of sections 7,9, 10 of the IBC for a further period of three months," the government notification. Finance Minister Nirmala Sitharaman also informed the same over a tweet.
In exercise of the powers conferred by section 10A of the Insolvency and Bankruptcy Code, 2016, the Central Government has extended the suspension of sections 7,9, 10 of the IBC for a further period of three months. pic.twitter.com/ZFkpABGWd9
— NSitharamanOffice (@nsitharamanoffc) September 24, 2020
The ordinance was brought in after extended lockdown to curb the spread of coronavirus, which caused a severe blow to businesses, especially small ones, raising the possibility of loan defaults and subsequent their labelling as non-performing assets (NPAs).
