Gujarat Global News Network, New Delhi
The Rajya Sabha on Saturday passed the Insolvency and Bankruptcy Code (Second Amendment) Bill, 2020. Accordingly, fresh insolvency proceedings will not be initiated for atleast six months starting from March 25 amid the corona virus panademic.
Union Finance Minister Nirmala Sitharaman had moved the Bill for consideration and passing in the Upper House. The Ordinance was promulgated on June 5 to provide relief to companies from initiation of insolvency procedure due to sudden outbreak of Covid-19 pandemic and consequent 68-day hard lockdown that disrupted the economy.
The ordinance prohibited the initiation of insolvency proceedings for defaults arising during the six months from March 25, 2020 and extendable up to one year. Thus, it prohibits initiation of any insolvency proceedings by either any creditor or the corporate debtor.
The government proclaimed the ordinance in response to the sudden outbreak of Covid-19 pandemic that battered businesses and put enterprises into stress for reasons beyond their control. The relief was also provided to stressed units as meaningful resolution was not expected in this kind of adverse business environment.
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