To contain the current pandemic situation on account of COVID 19, the Central Government of India has also declared national lockdown for twenty-one (21) days effective from 25th March 2020 till 14th April 2020.
During the said lockdown period, the Insolvency Resolution Professionals were facing various difficulties in holding meetings of Committee of Creditors, taking custody of the properties of the Corporate Debtor, visiting the offices/ sites of the Corporate Debtor, preparing information memorandum, inviting resolution plans from prospective resolution applicants and performing other functions under the IBC.
To overcome this, the Insolvency and Bankruptcy Board of India (“IBBI”) has pursuant to the power conferred under Insolvency and Bankruptcy Code, 2016 (“Code”), inserted a new provision of 40C in IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 with effect from 29th March 2020.
Highlights of the Amendments
New Provision of 40C read as
“40C. Special provision relating to time-line.
Not withstanding the time-lines contained in these regulations, but subject to the provisions in the Code, 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 such lockdown, in relation to a corporate insolvency resolution process.”
IBBI has sought to provide relaxation for the timelines required to be complied with under the IBC and rules framed thereunder.
Subsequent to the said amendment, the National Company Law Appellate Tribunal (“NCLAT”) has vide its order dated 30th March 2020 in Company Appeal 190 of 2019 along with several other appeals accordingly directed that, the period of lockdown shall be excluded while calculating the period of interim order. Moreover, it also clarified that in the event, lockdown period being further extended post the current twentyone days period, the exclusion period shall also include such period of extension.
The said amendment gives much needed room to the Insolvency Resolution Professionals to fulfill their duties for the time being, however, what remains to be seen is that whether the economic and financial markets would remain feasible for the any meaningful corporate rehabilitation/ resolution in the future.
Originally published 9 April 2020
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