IBC suspended for a year, Covid-19 related debt exempted from default

The Corporate Affairs ministry will issue a special circular to define the time period which will cover "covid related debt" to be exempted from default, the finance minister said

The government has exempted all Covid-related debt from the definition of default under the insolvency and bankruptcy code (IBC) and suspended any fresh initiation of insolvency for up to a year, Finance Minister Nirmala Sitharaman said on Sunday.

Among other measures, the government will introduce an ordinance for decriminalising the Companies Act and move the majority of compoundable offences to an internal adjudication mechanism.

The reforms announced as part of Prime Minister Narendra Modi’s call for Atmanirbhar (self-reliant) India also include a special insolvency framework for micro, small, and medium enterprises (MSMEs) by introducing a new section in the IBC.

The corporate affairs