New Delhi: Parliament on Monday approved the Insolvency and Bankruptcy Code (Second Amendment) Bill, 2020 to protect COVID-19-stressed companies from being pushed into insolvency under the Code.
Winding up a discussion on the bill in Lok Sabha, Finance and Corporate Affairs Minister Nirmala Sitharaman said the provisions will not impact insolvency proceedings initiated before March 25, the day the national-wide lock down was imposed by the government to check the spread of coranavirus.
"We have to prevent companies facing distress on account of pandemic from being pushed into insolvency," the minister said, adding the many other countries have extended support to the companies to help them come out of the current crisis.
The bill seeking to replace an ordinance, promulgated in June, was later approved by Lok Sabha. Rajya Sabha approved the bill on Saturday.
The relaxation from initiation of insolvency proceedings was initially provided for a period of six months which ends on September 25.
A decision with regard to extension of the time period by another six months was likely to be taken later in the week.
The changes in Sections 7, 9 and 10 of the IBC, she said, would provide relief to companies reeling under the impact of the coronavirus pandemic.
Read: No permit required for transport vehicles carrying oxygen: Govt
Sections 7, 9 and 10 deal with initiation of corporate insolvency resolution process by financial creditor, operational creditor and corporate debtor, respectively.
The minister said that insolvency proceedings against corporates defaulting on loans prior to March 25 will continue and the amendment will not stall those cases.
