No application can be filled for initiations of corporate insolvency resolution process of a corporate debtor for any default on or after March 25, 2020, for a period further of three months from September 25, 2020.
Notification regarding this has been published in the Official Gazette of India on September 24, 2020.
On September 21, 2020, the Parliament has passed the Insolvency and Bankruptcy Code (Second Amendment) Bill, 2020. Section 10A of the code according to this amendment, is
" 10A. (1) Notwithstanding anything contained in section 7, 9, and 10, no application for initiation of corporate insolvency resolution process of a corporate debtor shall be filed, for any default arising on or after March 25, 2020, for a period of six months or such period, not exceeding one year from such data as may be notified in this behalf. Provided that no application shall ever be filed for initiation of corporate insolvency resolution process of a corporate debtor for the said default occurring during this said period."
The amendment also states that the provision of this section shall not apply to any default committed under the said action before March 25, 2020.
Insolvency and Bankruptcy Code (Second Amendment) Bill, 2020 Highlights
- The Bill restricts the initiation of the Corporate Insolvency Resolution Process, either voluntary or by the creditors for the default which has arisen during six months from March 25, 2020, and this period may however be extended by the Central Government to 1 year through notification. The explanation appended to Section 10A of the bill clear that during this period Corporate Insolvency Resolution Process can still be initiated for any default which arises before March 25, 2020.
- The Bill also prohibits Resolution Professional from filing an application before the National Company Law Tribunal to contribute the personal assets of the director or a partner of the corporate debtor to the company assets.