Govt. extends IBC pause by 3 months

Why is it in news?
  • The Centre has extended the suspension of relevant provisions of the Insolvency and Bankruptcy Code (IBC) against firms defaulting on their loans since 25 March, 2020.
Details:
  • The IBC’s invocation was first suspended for a period of six months in view of the emergent stress on balance sheets due to the COVID-19 pandemic
  • The Corporate Affairs Ministry notified a further three-month extension when that six-month period was due to end.
About Insolvency and Bankruptcy Code (IBC):
  • The Code offers a uniform and comprehensive insolvency legislation encompassing all companies, partnerships and individuals.
  • It suggests two options:
(1) Restructuring if the firm is viable.
(2) Liquidation if the firm is not financially viable.
  • Regulator under IBC: The Insolvency and Bankruptcy Board of India (IBBI).
Time Limit:
  • The IBC fixes the deadline for resolution to 330 days.
  • However, as per recent Supreme Court verdict, the deadline of 330 days is not sacrosanct, as Supreme Court has asked to extend the deadline for resolution.
Posted by Jawwad Kazi on 25th Sep 2020
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