In a major relief for companies browsing insolvency under the Insolvency and Bankruptcy Code (IBC), the IBBI on Sunday said that the duration of lockdown won't be counted in the timeline for the resolution process.
In a notification, the IBBI announced the insertion of regulation '40C', a special provision associated with timeline of Corporate Insolvency Resolution Process (CIRP) under the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016.
The notification said that as per the regulation, "The period of lockdown imposed by the Central Government in the wake of COVID19 outbreak shall not be counted for the purposes of the timeline for any activity that could not be completed due to such lockdown, in relation to a corporate insolvency resolution process."
It said that the regulation would immediately inherit effect.
This is another major relief for the corporate world amid the coronavirus crisis. Among other recent changes under the IBC, minister of finance Nirmala Sitharaman last week said that the edge for default under the IBC has been raised to Rs 1 crore from the present Rs 1 lakh.
She also assured that the govt will keep a watch on things and if things remain the same beyond April 30, the govt may consider suspending Sections 7, 9, and 10 of the Insolvency and Bankruptcy Code (IBC) for 6 months. This may prevent companies from being forced into insolvency proceedings in such act of God causes of default.