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Policy and regulations

The IBC puzzle: new provisions stir confusion, mar Covid-19 relief for insolvency stakeholders

Over four months into the pandemic, the insolvency ecosystem is still struggling with the ambiguities in the notification that increased the default trigger to INR1 crore from INR1 lakh earlier. An ordinance that came two months later has not put the matter to rest. As debtors and creditors play a cat-and-mouse game, confusion prevails.
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5 Aug 2020 8 Mins Read 0 comment
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In February, a subsidiary of a Delhi-based financial institution had generated a demand notice under the Insolvency and Bankruptcy Code (IBC) against some personal guarantors for default of a corporate loan over a year ago. While the event happened more than a month before the pandemic-triggered lockdown was imposed, the National Company Law Tribunal (NCLT) has not taken up
he says. Participants feel that NCLTs should strike a middle path to ensure nobody is unfairly disadvantaged. “There should be some way out so that the corporate debtors do not hide under the Covid-19 situation for previous default and genuine cases are given relief across India by all benches,” sums up Sanghai. ( Graphics by Mohammad Arshad)
In February, a subsidiary of a Delhi-based financial institution had generated a demand notice under the Insolvency and Bankruptcy Code (IBC) against some personal guarantors for default of a corporate loan over a year ago. While the event happened more than a month before the pandemic-triggered lockdown was imposed, the National Company Law Tribunal (NCLT) has not taken up he says. Participants feel that NCLTs should strike a middle path to ensure nobody is unfairly disadvantaged. “There should be some way out so that the corporate debtors do not hide under the Covid-19 situation for previous default and genuine cases are given relief across India by all benches,” sums up Sanghai. ( Graphics by Mohammad Arshad)

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