IBC suspension may not get extended beyond March 24

NEW DELHI: The ongoing suspension of bankruptcy action against corporate defaulters may not be extended when it expires on March 24, a government official said, given the revival in business fortunes thanks to a robust recovery. The ministry of corporate affairs will announce its decision a few days before the expiry of the suspension of key provisions in the Insolvency and Bankruptcy Code (IBC), the official said on condition of anonymity.

The broad understanding within the government, based on current facts, is that there is no need for an extension, the official said, adding if at all there is a requirement, the option for an extension exists.

This marks a turning point in policymakers’ pandemic response, with efforts now focused on steering the economy back to normalcy with a massive spending programme for the next fiscal. “The situation in March 2020 and now is quite different. The coronavirus situation has improved.

GST collections are at an alltime high. Buoyant stock market indices, too, reflect the confidence in economic recovery. A changed situation requires a changed response,” the official said.

The government does not want to suspend the operations of IBC, one of the stellar pieces of its reforms, for an extended period of time as that would mean artificially keeping alive businesses that are not viable in a changed world.

Experts are awaiting the promised alternatives to deal with the stress in the economy.