Changes to insolvency law get RS approval

NEW DELHI: Rajya Sabha on Saturday passed amendments to the insolvency law, suspending fresh insolvency proceedings for at least six months starting March 25, with finance minister Nirmala Sitharaman saying a decision on extending the suspension of relevant provisions will be taken next week.

In the wake of the Covid-19, the government decided to suspend the provisions starting March 25, for six months, by promulgating an ordinance in June. The six-month period ends next week.

The Insolvency and Bankruptcy Code (Second Amendment) Bill, 2020, to replace the ordinance issued, was passed by a voice vote after a brief discussion.

The amendment provides for suspension of sections 7, 9 and 10 of the IBC for at least six months and is extendable up to one year from March 25, 2020. A new section, 10 A, has been inserted in this regard.

“At the moment, amendment to the code gives me a provision to only extend till one year. If at all, because it is coming to an end on September 25 this year, September 24 itself we have to make an announcement about what is going to happen. Even if I do, it means by March it should be ending...,” Sitharaman said.

A majority of the opposition parties supported the Bill, but urged the government to provide interest waiver on loans to farmers and vulnerable sections. Many expressed fears over its possible misuse by corporates, but hoped it will help revive the economy.

THE INSOLVENCY AND BANKRUPTCY CODE (SECOND AMENDMENT) BILL, 2020, TO REPLACE THE ORDINANCE ISSUED, WAS PASSED BY A VOICE VOTE AFTER A BRIEF DISCUSSION