Relief to companies during the Corona period, the government did this important work
The government extended the ban on starting new cases under the Insolvency and Debt Removal Act (IBC) by three months. Due to the interruption in economic activity during the Coronavirus epidemic, the introduction of new cases was banned under the Insolvency Act. The Ministry of Corporate Affairs issued a notification on Tuesday, extending the period of suspension issued for bringing new cases under the Insolvency Act by three months.
The period was ending on 24 December. The new three-month period of the ban will start from 25 December 2020. The government had earlier issued an ordinance in June. Under which the action to bring new cases under the Insolvency and Debt Removal Act was suspended. This suspension was implemented from 25 March 2020. The lockdown was imposed in the country from this day itself. Due to this lockdown, the new insolvency process was suspended.
Who will benefit: Subsequently, during the Monsoon Session of Parliament in September, this Ordinance was replaced by a Bill which was passed by Parliament. Initially, it was suspended for six months from 25 March and after that, the suspension was further extended for three months. Now this suspension has been extended for three months till 24 March 2021. In order to give relief to companies struggling with the effects of the Coronavirus epidemic, the government suspended sections 7, 9 and 10 of the Insolvency and Debt Removal Act. These clauses relate to initiating the bankruptcy resolution process on behalf of financial lenders, operational lenders and corporate borrowers.
