The Lok Sabha on Monday passed the Insolvency and Bankruptcy Code (Second Amendment) Bill, 2020, to ensure that fresh insolvency proceedings will not be initiated against stressed companies for at least six months starting March 25 amid the coronavirus pandemic. The Rajya Sabha had passed the bill on September 19.
The Bill provides that for defaults arising during the six months from 25th of March this year, CIRP can never be initiated by either the company or its creditors.
The changes in Sections 7, 9 and 10 of the IBC would provide relief to companies reeling under the impact of the coronavirus pandemic. Sections 7, 9 and 10 deal with initiation of corporate insolvency resolution process by financial creditor, operational creditor and corporate debtor, respectively.
The Insolvency and Bankruptcy Code allows a corporate debtor as well as its creditors to initiate an insolvency resolution process.