The Hon’ble Union Finance Minister, Smt. Nirmala Sitharaman convened a press conference on 24th March 2020 to make announcements on statutory and regulatory compliance matters. The Minster of State for Finance and Corporate Affairs, Shri. Anurag Singh Thakur was also present.
Amongst various other announcements made, a specific announcement was also made with respect to the Insolvency and Bankruptcy Code, 2016 (“IB Code”). Amidst the outbreak of the Novel Coronavirus (COVID-19) and taking into consideration the emerging financial distress being faced by various companies in India and bearing in mind the lockdown imposed in various States of the country, the Hon’ble Union Finance Minister provided relaxation for companies under the Companies Act, the IB Code and further extended deadlines for Tax (direct and indirect) compliances and more.Through this article, we are only highlighting the relaxations made to the IB Code. The key takeaways from the press conference in the IB Code are as follows:
- The Hon’ble Union Minister has increased the threshold, provided under Section 4, triggering the IB Code, to Rupees One Crore, as against the existing threshold of Rupees One lakh. The Finance Ministry has taken this step to mainly prevent the MSMEs being dragged under the IB Code.
- The Hon’ble Union Minister further mentioned that, if the current situation persists beyond 30th April 2020, the Ministry may then consider suspending Section 7, 9 and 10 of the IB Code. Section 7, 9 and 10 are the sections under which a Corporate Insolvency Resolution Process can be initiated against a company by a Financial Creditor, Operational Creditor and the Corporate Debtor (company) against itself, respectively.
The actual details of relaxations provided and whether it would apply to all parties or only MSMEs will be clear once the notification is received.
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