Under, India’s insolvency and bankruptcy code bankrupt firms get 270 days to complete the resolution process.
MUMBAI: In a move aimed at smooth resolution of insolvent firms, the finance ministry is considering waving off the 21-day national lockdown from the bankruptcy resolution process keeping in mind the hardships faced due to the nationwide lockdown. People in the know also said that the waiver period could be extended in line with the national lockdown. Under, India’s insolvency and bankruptcy code bankrupt firms get 270 days to complete the resolution process.
“Notwithstanding the time-lines contained in these regulations, but subject to the provisions in the Code, the period of lockdown imposed by the Central Government in the wake of COVID- 19 outbreak shall not be counted for the purposes of the time-line for any activity that could not be completed due to such lockdown, in relation to a corporate insolvency resolution process,” a note sent by the insolvency regulator to the government which ET has seen says.
The finance minister has recently said that if the disruption caused by coronavirus extends then it would suspend the use of the corporate insolvency resolution process for sometime. The finance minister had also increased the minimum amount of the default required to initiate the insolvency resolution and liquidation processes against companies from one lakh rupees to one crore rupees.
“In respect of ongoing IBC processes, delays are natural as the investing community is expected to be more discerning about their bids and in many cases whether to bid at all – owing to the lockdown, the best of businesses are focusing on cash conservation and this will prove an immense challenge for the insolvent companies and their RP’s. Extension of the bid process is quite a likely scenario, and expect it to be complemented by enhancement of the RP period”, said Sanjeev Krishan, partner and leader – Deals, PwC India.