India has recently extended the suspension of insolvency proceedings by another three months until March 25, as corporates are struggling to cope with the pandemic. While the measure is bound to lighten their burden, policymakers will need to plan to prevent the resolution process’s snarl-up.
On March 24, 2020, the minimum threshold for default under Section 4 of the Insolvency and Bankruptcy Code was increased to Rs 1 crore to deter the triggering of insolvency proceedings against Indian companies. Moreover, the government introduced an ordinance to impose a blanket ban on initiating Corporate Insolvency Resolution Proceedings (CIRP).
The ordinance inserted Section 10A into the IBC, which prohibits debtors, financial creditors, and…
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