AgenciesDuring the suspension period, fresh proceedings under the IBC were not allowed.Around 200 applications for resolution of stressed assets have been filed under the insolvency law since the suspension of fresh proceedings ended on March 24, according to IBBI. Amid the coronavirus pandemic that had significantly impacted economic activities, certain provisions under the Insolvency and Bankruptcy Code (IBC) were suspended with effect from March 25, 2020. The suspension was in place for one year till March 24, 2021.
Talking about fresh insolvency filings after the expiry of the suspension, IBBI Chairperson M S Sahoo said the higher threshold of default of Rs 1 crore coupled with support and forbearances limit the flow of applications.
During the suspension period, fresh proceedings under the IBC were not allowed.
“Since expiry of suspension on filing, about 200 applications have been filed. This is on expected lines and has been the experience internationally. The higher threshold of default of Rs 1 crore coupled with support and forbearances limit the flow of applications,” Sahoo told .
The Insolvency and Bankruptcy Board of India (IBBI) is a key institution in implementing the IBC.
“More importantly, the stakeholders like to use the Code when the likelihood of resolution is high. Since the markets and the economy are not in the best of their times, the stakeholders may be waiting for the appropriate time to use the Code,” Sahoo said.
In June 2020, an ordinance was promulgated to suspend fresh insolvency proceedings and the same came into force retrospectively from March 25, 2020 — the day when the nationwide lockdown to curb spreading of coronavirus infections had come into effect.
Later, a bill to replace the ordinance that had amended the Code was cleared by Parliament in September 2020.
Initially, the suspension of fresh proceedings was for six months starting from March 25. The same was extended twice for three months each — one till December 24, 2020 and then till March 24, 2021.
The corporate affairs ministry had suspended Sections 7, 9 and 10 under the IBC to provide relief for companies hit by the pandemic.
Sections 7, 9 and 10 deal with initiation of corporate insolvency resolution process by a financial creditor, operational creditor and corporate debtor, respectively. Insolvency proceedings are initiated once an application is admitted by the National Company Law Tribunal (NCLT).