Govt. to suspend IBC rules for up to one year
Move to help banks to rejig loans
- In a major relief for corporate borrowers hit hard by the COVID-19 pandemic, the government has decided to amend the insolvency law to suspend up to one year provisions that trigger insolvency proceedings against defaulters.
- The amendments to the IBC (Insolvency and Bankruptcy Code) would pave the way for banks to restructure loans.
- An ordinance would be promulgated to suspend three sections of the IBC for up to one year and a decision in this regard was taken by the Union Cabinet.
- Sections 7, 9 and 10 of the IBC would be suspended for six months and the suspension time can be extended by up to one year.
- Suspension of these provisions could be extended up to one year based on the economic situation going forward.
- The effective date of the amendments coming into force would be the date of promulgation of the ordinance.
- Section 7 and 9 pertain to initiation of corporate insolvency proceedings by a financial creditor and an operational creditor, respectively.
- Section 10 relates to filing of an application for insolvency resolution by a corporate.