22 Dec 2020 3:12 PM GMT
The Ministry of Corporate Affairs on Tuesday(December 22) issued a notification to extend the suspension of insolvency proceedings by another three months with effect from December 25 till March 25, 2021.The new notification comes ahead of the end of the present suspension period which is set to end on December 25.In June, the Centre had suspended IBC proceedings for a period of six months...
The Ministry of Corporate Affairs on Tuesday(December 22) issued a notification to extend the suspension of insolvency proceedings by another three months with effect from December 25 till March 25, 2021.
The new notification comes ahead of the end of the present suspension period which is set to end on December 25.
In June, the Centre had suspended IBC proceedings for a period of six months with effect from March 25 taking note of the difficulties created by the COVID19 pandemic and the lockdown. An ordinance was promulgated to incorporate Section 10A to the Insolvency and Bankruptcy Code to effectively suspend the operation of Sections 7, 9 & 10 of IBC with respect to default arising on or after March 25 for a period of 6 months, extendable up to maximum of one year from such date as may be notified.
Later, in September, the suspension period was extended for three months up to December 25.
The Ordinance was replaced by the Insolvency and Bankruptcy(Second Amendment) Act 2020 passed by the Parliament in September 2020.
Section 10A added to the principal Act by the 2020 IBC Amendment Act states :
"Notwithstanding anything contained in Sections 7, 9 and 10, no application for initiation of corporate insolvency resolution process of a corporate debtor shall be filed, for any default arising on or after 25th March, 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.
Provided that no application shall ever be filed for initiation of corporate insolvency process of a corporate debtor for the said default occurring during the said period.
Explanation - For the removal of doubts, it is hereby clarified that the provisions of this section shall not apply to any default committed under the said sections before 25th March, 2020".
The notification issued by the Ministry of Corporate Affairs on Tuesday states that the Central Government notifies further period of three months from December 25, 2020 for the purpose of Section 10A.
While issuing the Ordinance in June, the Centre said that it was considered expedient to suspend Sections 7, 9 and 10 of IBC to prevent corporate persons experiencing distress on account on unprecedented situation being pushed into insolvency for some time.
On May 17, Union Minister for Finance and Corporate Affairs, Nirmala Sitharaman, had announced the decision of the government to suspend IBC for defaults which occurred due to lockdown.
Click here to read/download the notification