Amendment in Insolvency and Bankruptcy Code
The Rajya Sabha on 19 September 2020 passed the Insolvency and Bankruptcy Code (Second Amendment) Bill, 2020, whereby fresh insolvency proceedings will not be initiated for at least six months starting from March 25 amid the coronavirus pandemic. Finance Minister Nirmala Sitharaman said the intention of the IBC is to keep companies a "going concern" and not liquidate them.
- Finance Minister Nirmala Sitharaman said law provides for carrying out insolvency and bankruptcy proceedings against corporate debtors as well personal guarantors together.
- The corporate debtor often has guarantors. So for comprehensive corporate insolvency resolution and liquidation we felt it was necessary that the insolvency of the corporate debtor as well as its guarantors are considered together to whatever extent it is possible.
- In June, an ordinance was promulgated to amend the Insolvency and Bankruptcy Code (IBC) whereby fresh insolvency proceedings will not be initiated for at least six months starting from March 25 amid the coronavirus pandemic.
- Default on repayments from March 25, the day when the nationwide lockdown began to curb coronavirus infections, would not be considered for initiating insolvency proceedings for at least six months.
- Sections 7, 9 and 10 deal with initiation of corporate insolvency resolution process by financial creditor, operational creditor and corporate debtor, respectively.
- Citing data for NPAs of commercial banks during 2018-19, she informed the House that Lok Adalats recovered 5.3 per cent, Debt Recovery Tribunals (DRTs) recovered 3.5 per cent and SARFAESI recovered 14.5 per cent. On the other hand, IBC ensured 42.5 percent of recovery.