Govt Mulls Suspending IBC Process For 6 Months

In a relief for small and medium enterprises facing the threat of insolvency because of the coronavirus crisis, the government on Tuesday raised the threshold for invoking insolvency to ₹1 crore from the current ₹1 lakh.

- Ruchika Chitravanshi

Finance Minister Nirmala Sitharaman, while addressing the media through video conferencing, also said if the situation continued to be difficult, the government would consider suspending the provisions for triggering insolvency for six months.

This means suspending Sections 7, 9 and 10 of the Insolvency and Bankruptcy Act (IBC), which enable a financial creditor, operational creditor and the promoter, respectively, to initiate insolvency proceedings IR against a company. The Ryan proposed move will “stop companies at large from being forced into insolvency proceedings in such force majeure causes of default”, said a government release.