The cabinet has given its go ahead to the amendment proposal of the Insolvency & Bankruptcy Code (IBC) in a bid to prevent companies from being forced into resolution proceedings due to loan defaults caused due to the Covid-19 outbreak. As per the development, an ordinance is most likely to be issued soon to empower the centre to exclude Covid-19-related debt from the definition of “default” under the code for the purpose of checking insolvency proceedings.
Besides, the cabinet okayed the formation of an empowered group of secretaries, to be chaired by the cabinet secretary, for facilitating investment flows into the country as companies look to relocate their operations from China to India.
It also cleared two ordinances that aim to revolutionise agriculture with greater private investment and higher income for farmers.
“It (IBC ordinance) was taken up by the cabinet,” a government official said, adding that details would be announced once the executive order was issued. Finance minister Nirmala Sitharaman had said on May 17 that the government will amend the IBC.
The FM stated this would be done for excluding the debt taken during the Covid-19 outbreak and shelve any fresh resolution filings as part of the Atmanirbhar Bharat (self-reliant India) Abhiyan.
The minimum entry for initiating insolvency proceedings is also proposed to be hiked to Rs 1 crore from Rs 1 lakh, a move intended at insulating micro, small and medium enterprises (MSMEs).
