Parliament monsoon session: RS passes insolvency, bankruptcy bill

Union Finance Minister Nirmala Sitharaman had moved the Bill for consideration and passing in the Upper House. The bill is aimed at replacing the Insolvency and Bankruptcy Code (Amendment) Ordinance 2020
Finance minister Nirmala Sitharaman speaks in the Rajya Sabha on Saturday.(PTI)
Finance minister Nirmala Sitharaman speaks in the Rajya Sabha on Saturday.(PTI)
Published on Sep 19, 2020 12:30 PM IST
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Hindustan Times, New Delhi | By

The Rajya Sabha on Saturday passed the Insolvency and Bankruptcy Code (Second Amendment) Bill, 2020 by voice vote.

Union Finance Minister Nirmala Sitharaman had moved the Bill for consideration and passing in the Upper House. The bill is aimed at replacing the Insolvency and Bankruptcy Code (Amendment) Ordinance 2020.

The Ordinance was promulgated on June 5 to provide relief to companies from initiation of insolvency procedure due to sudden outbreak of Covid-19 pandemic and consequent 68-day hard lockdown that disrupted the economy.

The ordinance prohibited the initiation of insolvency proceedings for defaults arising during the six months from March 25, 2020 and extendable up to one year. Thus, it prohibits initiation of any insolvency proceedings by either any creditor or the corporate debtor.

The government proclaimed the ordinance in response to the sudden outbreak of Covid-19 pandemic that battered businesses and put enterprises into stress for reasons beyond their control. The relief was also provided to stressed units as meaningful resolution was not expected in this kind of adverse business environment.

The government suspended certain sections of IBC to prevent business into being pushed into insolvency. The government’s intention was to give immunity to stressed companies during this Covid-19 period through this ordinance.

Among the speakers on the bill was Congress MP Vivek Tankha who said the ordinance, which was the precursor to the bill, was brought hurriedly. He sought the government look into certain provisions including the one year period clause.

Responding to the point raised by Congress member, Sitharaman said not “exceeding one year” if removed would naturally mean excessive delegation to the executive.

Sitharaman also listed how the government steps towards insolvency law had led to a large number of resolutions.

The Bill was passed by a voice vote. Among other members, K K Ragesh (CPI-M) said why relief was not being provided to farmers who were also facing economic hardships. ENDS

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Wednesday, May 18, 2022