Insolvency And Bankruptcy Code (2nd Amendment) Bill passed

Insolvency And Bankruptcy Code (2nd Amendment) Bill passed

Part of: GS Prelims and GS-III – Economy

In news

• Rajya Sabha passed the Insolvency and Bankruptcy Code (2nd Amendment) Bill, thereby temporarily suspending initiation of Corporate Insolvency Resolution Process.

Key takeaways

• It amends the Insolvency and Bankruptcy Code, 2016.
• The Bill seeks to temporarily suspend initiation of the corporate insolvency resolution process (CIRP) under the Code.
• When a default occurs, the Code allows the creditors of the company or the company itself to initiate CIRP by filing an application before the National Company Law Tribunal (NCLT).
• The Bill provides that for defaults arising during the six months from March 25, 2020, CIRP can never be initiated by either the company or its creditors.
• The central government may extend this period to one year through notification. The Bill clarifies that during this period, CIRP can still be initiated for any defaults arising before March 25, 2020.