The Central Government on Friday promulgated Insolvency and Bankruptcy (Amendment) Ordinance 2020 to effectively suspend the operation of Sections 7, 9 & 10 of Insolvency and Bankruptcy Code with respect to default arising on or after March 25 for a period of 6 months, extendable up to maximum of one year from such date as may be notified.
The exemption is not applicable to defaults occurring prior to March 25. This has been done by inserting Section 10A in the principal Act of Insolvency and bankruptcy code , stating :
“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 notified in this behalf”.
“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″.
Sub-section (3) of the Act has been added to Section 66 to state that no resolution professional should file any application with respect to such default against which CIRP has been suspended as stated in Section 10A of Insolvency and bankruptcy code.
The Centre said that it was considered expedient to suspend Sections 7, 9 and 10 of Insolvency and Bankruptcy code to prevent corporate persons experiencing distress on account on unprecedented situation being pushed into insolvency for some time.
Read the ordinance here: