Govt promulgates ordinance to amend insolvency lawtext_fields
New Delhi: The government on Friday promulgated an ordinance to amend the Insolvency and Bankruptcy Code (IBC) wherein fresh insolvency proceedings will not be initiated for defaults on account of the coronavirus pandemic.
Default on repayments from March 25, the day when the nationwide lockdown began to curb coronavirus infections, would not be considered for initiating insolvency proceedings for a certain period of time.
Insolvency proceedings would not be initiated for "any default arising on or after March 25, 2020 for a period of six months or such further period, not exceeding one year from such date, as may be notified in this behalf," the ordinance said.
Under the IBC, an entity can seek insolvency proceedings against a company even if the default is only one day. This is subject to the minimum threshold of Rs 1 crore. Earlier, the threshold was Rs 1 lakh.