The 330-day time frame for resolution of cases under the Insolvency and Bankruptcy Code (IBC) will now exclude the national lockdown of 21 days that started last Wednesday to curb the spread of coronavirus.
Effective Sunday, the Insolvency and Bankruptcy Board of India (IBBI) changed the regulations, stating, “It is difficult for the insolvency resolution professionals to continue to conduct the process, for members of the committee of creditors (CoC) to attend the meetings, and for prospective resolution applicants to prepare and submit resolution plans, during the period of lockdown.”
Therefore, it may be difficult to complete various activities during a corporate insolvency resolution process within the time frame specified by the regulations, it added in a release on Sunday.
The resolution process for a case, including litigation, has to be completed within 330 days under the bankruptcy law.
In view of the pandemic, the government may further ease the bankruptcy law as reported earlier, suspending sections of the law that deal with the initiation of insolvency proceedings by a lender, operational creditor and the company itself.
The finance minister had hinted at the relaxation last week.
Earlier this month, a report by the United Nations Conference on Trade and Development stated that coronavirus would impact Indian trade by around $348 million (Rs 2,623 crore). The report puts India among the top 15 global economies adversely impacted by the manufacturing slowdown in China.
As on 31 December 2019, a total of 3,312 companies were admitted under IBC.
Almost 24% or 780 of the cases have ended in liquidation. Out of the 3,312 total, 246 have been closed on appeal, review or settled and 135 have been withdrawn.
