Nirmala Sitharaman, Union Minister of Finance and Corporate Affairs, on Sunday announced that debts incurred due to COVID-19 lockdown will not be treated as “default” under the Insolvency and Bankruptcy Code 2016.
There will be an embargo on fresh insolvency proceedings for a period of one year. Minimum threshold to initiate insolvency proceedings will be raised to Rs 1 crore from the Rs 1 lakh.
For MSMES debts, a special insolvency framework will be notified under Section 240A IBC, added the Finance Minister.
The Minister said that an appropriate Ordinance will be brought in for effecting these changes.