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Suspension of IBC extended
Why is it in news?
- The government has decided to extend the suspension of the Insolvency and Bankruptcy Code (IBC) till March 31, 2021.
Details:
- The purpose behind the extension is to help businesses cope with the lingering difficulties posed by the COVID-19 pandemic.
- All defaults arising on or after March 25, when the national lockdown was imposed to curb the pandemic, will effectively remain out of the insolvency net for a full year.
- However, according to some experts, more action may be needed to help stressed corporate balance sheets.
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:
- Restructuring if the firm is viable.
- 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.