The Insolvency and Bankruptcy Code (IBC) would remain suspended until the end of the current financial year in view of “major stress” owing to the Covid-19 pandemic, Union Finance Minister Nirmala Sitharaman had said on Monday.
“The suspension of the IBC has been postponed even further, from 25th of December to, March 31, 2021,” Sitharaman said while addressing the Bangalore Chamber of Industry and Commerce via video conferencing.
According to the finance minister, IBC would remain suspended for the entire financial year. “Rightfully so, because every industry has gone through major stress because of the pandemic. And nobody could be drawn towards the insolvency process which may have occurred during the pandemic,” she said.
Not only the compliances but even the payments for the taxation which companies have to do were postponed.
In June, in order to give a breather to companies facing stress due to Covid-19, the government had brought an Ordinance exempting them from facing corporate insolvency resolution proceedings against any default arising on or after March 25, 2020, for a period of six months. This suspension was extended in September for another three months.
The IBC law empowers the government to issue a notification to extend the suspension for a period not exceeding one year. This suspension of the IBC is not applicable to any default committed before March 25, 2020.
The government had earlier said it was difficult to find adequate resolution applicants to rescue the corporate persons who might default in discharge of their debt obligation and that the Covid-19 pandemic had impacted the economy all over the world, creating uncertainty and stress for businesses for reasons beyond their control.