The Central Government (Ministry of Corporate Affairs) through Gazette Notification issued on 22th December 2020 notified another three months extension for suspension of insolvency proceedings for from 25th December, 2020.
An ordinance was promulgated in June this year for suspension of fresh insolvency proceedings and the same came into force retrospectively from March 25 — the day when the nationwide lockdown to curb spreading of Covid-19 had come into effect. Later, a bill to replace the ordinance that had amended the Insolvency and Bankruptcy Code (IBC) was cleared by Parliament in September.
Initially, the suspension of fresh proceedings under the IBC was for six months starting from March 25 and then, it was extended by three months. The corporate affairs ministry has suspended Section 7, 9 and 10 to provide relief for companiesreeling under the impact of the pandemic. Section 10A added to the principal Act by the 2020 Insolvency and Bankruptcy Code Amendment Act, 2020 which states that Notwithstanding anything contained in sections 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 25th March, 2020 for a period of six months or such further period, not exceeding one year from such date, as may be notified2 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 the said period. Explanation.
– For the removal of doubts, it is hereby clarified that the provisions of this section shall not apply to any default committed under the said sections before 25th March, 2020. Now, the suspension has been further extended by three months which will end on March 24, 2021. [READ NOTIFICATION]