Tag: IBC suspension

A flurry of insolvency applications soon as IBC suspension uplifts on March 24, BFSI News, ET BFSI

Banking & Finance

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The Insolvency and Bankruptcy Code (IBC) which is currently under suspension till March 24, 2021 in the backdrop of Covid-19 pandemic will now make a return as the economy strongly recovers, said KR Saji Kumar, Joint Secretary, Ministry of Law and Justice on Saturday.

Speaking at a virtual event of ETCFO.com, he said, “There isn’t any request from any stakeholders to continue with the suspension…We are not going for any more suspension. The gates are going to be opened 25th March 2021.”.

He believes the return of the law could possibly see flood of insolvency application at the courts but the regulation and systems have matured to deal with the surge in insolvency applications.

Kumar said, “We are again going to witness flood of applications, maybe another challenges to IBC process…But we have learnings now. We will be able to deal with it.”

He backs the government’s decision to put a halt on the regulation as it was need of the hour back then as the economy was in peril at that point in time.

The central government had suspended the IBC regulation to prevent businesses from going bankrupt due to Covid-19 related stress. The initial ban was for six months but was later extended for up to a year till March 24, 2021. Post which, the central bank had come up with one-time restructuring under its June 7 (2019) circular dealing with resolution of stressed assets.



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Reports, BFSI News, ET BFSI

Banking & Finance

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The central government may lift the blanket suspension of the Insolvency and Bankruptcy Code (IBC) to accelerate resolving stressed assets, reported Business Standard quoting sources. The government in December 2020 had postponed the suspension of the IBC till March 24, 2021, owing to stress in various sectors due to covid-19 pandemic. Earlier, it was done for six months effective from March 24, 2020.

“We are exploring two options — one, removing the suspension and allowing the resolution process in view of the rise in the number of fresh cases of default this fiscal year; second, bringing in some provisions to the IBC to exclusively deal with distressed sectors,” said a senior government official privy to the matter, told BS.

It was reported that to discuss the options, officials of the Ministry of Finance, Ministry of Corporate Affairs, and Insolvency and Bankruptcy Board of India (IBBI), along with other stakeholders, will meet this week.

“We don’t want to delay it because we aim to make the final decision by March 15,” the official said.

It is expected the government may also consider giving relief to some of the worst-affected sectors.



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