Insolvency and Bankruptcy Code (Amendment) Act, 2020

This article provides the reader with the key amendments made by the Indian Government to one of the most discussed code in the recent times. The entire world, suffering from a pandemic has led to unnecessary hardships for numerous business around the globe. Thus, the Government with a motive to reduce the impact of such hurdles had introduced this bill.

Introduction:

Speaking about the year 2020, the year has been a year full of changes, be it in the form of paradigm shift or be it in the form of downtrend in the stock market or be it in the form of amendments to various Acts through bills. India is no such exception to the current notion. It has introduced various policies for the welfare of the lower strata of the society, and has also brought about amendments in various Acts to support the business class.

One such amendment bill has been passed for the act pertaining to the Insolvency and Bankruptcy. The ordinance was issued by the Government as a part of Atma Nirbhar economic reforms. The preamble states that its has been promulgated to prevent corporates from being forced into Insolvency due to unprecedented situation arising out of Covid-19

The Hon'ble President of India has promulgated the IBC Ordinance 2020 on 5, June 2020. It has been passed in the 71st year of the Republic of India. The Ordinance shall be known as the Insolvency and Bankruptcy Code (Amendment) Act, 2020.

Key Takeaways:

· Ordinance to be known as Insolvency and Bankruptcy Code (Amendment) Act, 2020

· It received the Hon’ble President assent on 5, June 2020

· There has been a situation wherein it has been difficult to find adequate number of resolution applicant to rescue the defaulters of their debt obligations

· Suspension of Section 7, 9 and 10 of the Act

· The Act excludes the defaults committed in this situation

· Addition of Section 10A pertaining to suspension of application for default on or after 25, March 2020

· Addition of Section 66(3) pertaining to suspension of the application filed by resolution professional for default against which initiation of Corporate Insolvency Resolution process is suspended under Section 10A

The Scrapping of section 7, 9 and 10

Section 7 deals with filing of Corporate Insolvency Resolution process by a Financial creditor.

In case the application is filed by the committee of creditors, the application shall be filed jointly bt at least 100 creditors or 1/10 of creditors in the class (whichever is less). Similar provisions are also applicable to the allottees under same real estate project.

As per the recent amendment when such applications are filed and have not been admitted by the adjudication authority, such applications shall be modified to comply with the said proviso within thirty days. In case of no modification, the application shall be deemed to be withdrawn.

Section 9 deals with filing of Corporate Insolvency Resolution process by a Operational creditor.

Addition of Section 10A

ion 10 deals with filing of Corporate Insolvency Resolution process by the Corporate applicant.

No application for Corporate Insolvency Resolution process shall be filed for defaults arising on or after 25, March 2020 for six months. Also, no application shall be filed for defaults arising within this period.

Addition of Section 66(3)

No application shall be filed by resolution professional in respect of default against which initiation of process is suspended as per section 10A.

Conclusion

The aforesaid amendments have given the business' yet another opportunity to get back on track despite the misfortune that arose from the pandemic.

Author-Devyani Bhati

MKES college of law

Reference

https://ibclaw.in

www.lawstreetindia.com

www.irccl.in

www.mondaq.com

www.scconline.com

www.taxguru.com