Parliament Amends Insolvency Law to Protect COVID-hit Companies

Parliament on September 21, approved 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 in view of the corona virus pandemic.

Replying to a debate on the bill in the Lok Sabha, Finance Minister Nirmala Sitharaman said the intention of the IBC is to keep companies a "going concern" and not liquidate them and that the amendments would provide relief to companies reeling under the impact of the coronavirus pandemic.

The bill seeking to replace the Ordinance was later approved by the Lok Sabha. The Rajya Sabha has already approved in the bill on September 19th, 2020.

The bill mandates that a default on repayments from March 25, the day when a nationwide lockdown began to curb the spread of corona virus, would not be considered for initiating insolvency proceedings for at least six months. 

Parliament on September 21, approved 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 in view of the corona virus pandemic.

Replying to a debate on the bill in the Lok Sabha, Finance Minister Nirmala Sitharaman said the intention of the IBC is to keep companies a "going concern" and not liquidate them and that the amendments would provide relief to companies reeling under the impact of the coronavirus pandemic.

The bill seeking to replace the Ordinance was later approved by the Lok Sabha. The Rajya Sabha has already approved in the bill on September 19th, 2020.

The bill mandates that a default on repayments from March 25, the day when a nationwide lockdown began to curb the spread of corona virus, would not be considered for initiating insolvency proceedings for at least six months.