The government has decided to extend the suspension of insolvency and bankruptcy proceedings against companies for another three months till December 24 against the defaults since March 24, a notification by the corporate affairs ministry said.
In June, in order to give a breather to companies facing stress due to the pandemic, government brought an ordinance exempting companies from facing corporate insolvency resolution proceedings against any default arising for at least a six month period starting from March 25, assuring no such proceedings will ever be initiated for default during this period.
The six month period ended on September 24.
The IBC law has also been amended to include this provision which has empowered the government to issue a notification to extend the suspension for a period not exceeding one year.
This suspension of IBC will not be applicable to any default committed before March 25.
The three sections which stand suspended are Section 7, 9, and 10. A new Section 10A has been added to suspend the code.
The government had said that it is difficult to find adequate resolution applicants to rescue the corporate person who may default in discharge of their debt obligation and that the Covid-19 pandemic had impacted the economy all over the world creating uncertainty and stress for businesses for reasons beyond their control.