Ordinance to amend IBC on cards
It order to prevent companies from being forced into insolvency proceedings due to default caused by the Covid-19 exigency, an ordinance to amend the Insolvency and Bankruptcy Code is likely to be taken up by the Union Cabinet.
According to sources familiar with the development, the ordinance will seek to suspend (for six months at least) the relevant provisions of IBC Sections 7, 9 and 10, to provide relief to borrowers. Section 7 enables a financial creditor to file for initiating the corporate insolvency resolution process against a corporate debtor. Section 9 provides for application of insolvency by an operational creditor, and Section 10 is for initiation of insolvency proceedings by a corporate applicant.