Suspension of insolvency filings for defaults after March 25, 2020

This Bill temporarily suspends the initiation of corporate insolvency resolution proceedings for financial defaults arising on or after March 25, 2020, to provide relief to companies affected by the COVID-19 pandemic. It replaces a previous Ordinance with a permanent law.

Corporate debtors (companies) and financial creditors or operational creditors who would otherwise file applications to initiate insolvency proceedings against them.

• Inserts a new section 10A in the Insolvency and Bankruptcy Code, 2016.
• Suspends the filing of applications for corporate insolvency resolution for defaults arising on or after March 25, 2020.
• The suspension period is six months, extendable by the Central Government up to a maximum of one year from March 25, 2020.
• No application can ever be filed for defaults occurring during the suspension period.
• Amends section 66 to prevent resolution professionals from filing applications for defaults covered by the suspension.
• Repeals the Insolvency and Bankruptcy Code (Amendment) Ordinance, 2020, while preserving actions taken under it.

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