The government on Thursday extended the suspension of fresh insolvency proceedings under the insolvency law by three months amid the coronavirus pandemic. The six-month period of suspension, which was effective from March 25, was to end on Thursday.
According to a notification issued by the corporate affairs ministry, the suspension of fresh proceedings under the Insolvency and Bankruptcy Code (IBC) has been extended for a "period of three months from the 25th September, 2020". The government promulgated an ordinance in June for suspension of fresh insolvency proceedings and the same came into effect from March 25 — the day when the nationwide lockdown had come into effect.
A bill to replace the ordinance that had amended the IBC was cleared by Parliament on Friday. The ministry, which is implementing the IBC, has suspended Section 7, 9 and 10 to provide relief for companies reeling under the impact of the pandemic.
Sections 7, 9 and 10 deal with initiation of corporate insolvency resolution process by a financial creditor, operational creditor and corporate debtor, respectively.
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