Offering some relief to India Inc amid coronavirus outbreak, the centre has decided to suspend insolvency and bankruptcy proceedings for at least six months.
AS reported by the Business Standard, owing to challenges businesses are facing due to the Covid-19 pandemic the government is likely to suspend insolvency and bankruptcy proceedings, a senior government official told the English daily.
A new Section is most likely to be introduced to the Insolvency and Bankruptcy Code (IBC). It will suspend Sections 7, 9, and 10, which trigger insolvency proceedings for six months or a period not more than one year from the date they commence, the official said.
Section 7 of the Code helps financial creditors to begin insolvency proceedings in opposition to a company while Section 9 gives operational creditors these powers.
Under Section 10, the promoter of the company has the right to trigger insolvency proceedings against his or her own concern. All the three Sections will be suspended for six months or further.
The provision is likely to include a change in the Act, according to experts.