To address the difficulty faced by the lockdown due to COVID-19, the Insolvency and Bankruptcy Board of India (IBBI) amended the CIRP Regulations.
Key takeaways:
The Board provided that the period of lockdown imposed by the Central Government in the wake of COVID-19 outbreak shall not be counted for the purposes of the time-line for any activity that could not be completed due to the lockdown, in relation to a corporate insolvency resolution process.
This would be subject to the overall time-limit provided in the Code.
Important value additions:
The Insolvency and Bankruptcy Board of India
It was established on 1st October, 2016 under the Insolvency and Bankruptcy Code, 2016.
It is a key pillar of the ecosystem.
It is responsible for implementation of the Code.
The Insolvency and Bankruptcy Codeconsolidates and amends the laws relating to reorganization and insolvency resolution of corporate persons, partnership firms and individuals in a time bound manner.
Corporate Insolvency Resolution Process (CIRP)
It is a recovery mechanism for creditors.
If a corporate becomes insolvent, a financial creditor, an operational creditor, or the corporate itself may initiate CIRP.
The CIRP may include necessary steps to revive the company.
CIRP in a case under Insolvency and Bankruptcy Code, 2016 (IBC) needs to be completed in 330 days including time taken for litigation.
