Covid-19: Govt clears plan to suspend IBC for 6 months, ordinance soon

Suspension could be extended to one year and is expected to allow companies to get their business back on track without the fear of being dragged into insolvency

The Union Cabinet on Wednesday cleared a proposal to suspend the Insolvency and Bankruptcy Code (IBC) process for six months, which could be extended up to a year, sources said.

The government is likely to promulgate an Ordinance soon to bring the change into effect. The details of the Cabinet decision will be announced once the Ordinance is ready, a source said.

The proposal to suspend the insolvency process, taken in light of the Covid-19 pandemic, was announced by Finance Minister Nirmala Sitharaman on May 17. The FM had also said the government was devising a special resolution framework for micro small