Suspension - Boon or bane for the Insolvency and Bankruptcy Code

Hon’ble Finance Minister Nirmala Sitharaman announced on Sunday, as part of the fifth press conference, suspension of fresh initiation of insolvency proceedings up to one year.  This announcement comes as part of the government of India’s Rs 20 trillion Covid-19 economic package.

While the announcements were made today, the seeds of the repeal of Sections 7, 9 and 10 of the IBC had already been sown in April.  Effectively, this will prevent a borrower from being dragged into insolvency by a financial and/or an operational creditor.  Ever since the proposal came in, arguments have been made for it and against it.

Why