In order to give relief to Companies defaulting on loans due to the COVID- 19 stress and further enhancement of Ease of Doing Business, Finance Minister Nirmala Sitharaman on Sunday said no fresh insolvency will be initiated for one year under the Insolvency and Bankruptcy Code.
Also, coronavirus-related debt will be excluded from definition of default, she said.
Finance Minister announced the final tranche of ₹20 lakh crore stimulus package under the Atmanirbhar Bharat Abhiyan.
Sitharaman said, "No fresh insolvency proceeding will be initiated up to 1 year. At the moment MCA has extended this by 6 months, we intend to extend this by another 6 months. For MSMEs a special insolvency framework will be notified under section 240-A of IBC. The minimum threshold to initiate insolvency proceedings raised to Rs 1 crore from the earlier Rs 1 lakh, which largely insulates MSMEs."
Special insolvency resolution framework for MSMEs under Section 240A of the IBC shall be notified soon.
