Suspension of initiation of fresh Corporate Insolvency Resolution Process (CIRP) proceedings by three months
As per section 7 of the Insolvency and Bankruptcy Code, 2016, a financial creditor may initiate a corporate insolvency resolution process against a corporate debtor if it has defaulted in payment of a financial debt.
Similarly, as per section 9 of the Insolvency and Bankruptcy Code, 2016, an operational creditor may initiate a corporate insolvency resolution process against a corporate debtor if it has not made payment of the operational debt.
In this backdrop, a new section 10A has been introduced by the Insolvency and Bankruptcy Code (Second Amendment) Act, 2020. As per this section, any application for initiation of corporate insolvency resolution process against a corporate debtor shall not be filed, for any default arising on or after 25th March, 2020 for a period of six months or such further period, not exceeding one year from such date.
In this respect, the Ministry of Corporate Affairs has further extended this period for three months from 25th September, 2020 through a recent amendment.
