The Central Government vide ordinance promulgated on 5th June 2020 has amended the Insolvency & bankruptcy Code, 2016 which has effectively suspended fresh bankruptcy proceedings against persons impacted by COVID-19 for at least six months, up to a maximum of one year. The new rules shall come into effect immediately.
The Ordinance has inserted Section 10A to the principal act. It further suspends the operation of Sections 7, 9 & 10 (which provides for the initiation of the Corporate Insolvency Resolution Process- CIRP) for any default arising after 25th March 2020 for a period of 6 months for such further period not exceeding 1 year.
The Ordinance further inserts sub-section (3) to Section 66 of the Insolvency and Bankruptcy Code, 2016. It stipulates that a Resolution Professional is no longer entitled to file an application under Sec 66 (2) to initiate CIRP for any default occurring in the prescribed time period.
Click here to read the Ordinance.
