The global pandemic of COVID-19 has brought upon us various new challenges and the current situation has really reduced the good momentum of the economic activities in our economy. The lockdown which was announced for the safety of people is indeed doing its task well but in return is causing great losses to everyone and hence the entire economy is facing the consequences and having a hard time because of this pandemic. Many people have lost their business and several new relief measures were introduced in the insolvency resolution process in the country because of this COVID- 19 outbreak by the Government and by the Regulators. The Honourable Supreme Court had already caught the wind about the whole situation prevailing right now and gave its orders for the extension of the limitation period.
Another thing to point out is that the Suo Moto Order of NCLAT provided to exclude the lockdown period in Corporate Insolvency Resolution Process under the Insolvency & Bankruptcy Code 2016. And thus, important measures have been initiated in judicial, legislative and economic fields due to the unprecedented condition & also due to the financial distress on several businesses on account of huge frequency of disruptions in their normal functioning.
All these measures put into action provide benefit to the professionals and the other stakeholders & a list of all such measures was taken and enumerated in the ensuing section.
Let’s take a look at the important relief measures which were introduced in the Insolvency Resolution Process in the country by the government because of the outbreak of the COVID- 19 pandemic:
- On 20th March, 2020: IBBI (Insolvency and Bankruptcy Board of India) issued advisory stating that the pre-registration educational courses completed online will be accepted for registration.
The Insolvency and Bankruptcy Board of India (IBBI) issued an advisory stating that the pre-registration educational courses completed online will be accepted for registration. The issued advisory stated that to minimise the difficulties for the prospective IPs (Insolvency Professionals), it has been decided that pre-registration educational courses completed online will be accepted for registration and so, the IPAs (Insolvency Professional Agencies) are encouraged to deliver pre-registration educational courses online for their professional members.
- On 23rd March, 2020: Suo Moto writ petition at the Supreme Court of India in cognizance for the extension of existing limitation.
The Supreme Court ordered that irrespective of the limitation period which was prescribed under the general law or the special law, whether it was condonable or not, it will be extended from the date of March 15, 2020 and will stay extended till further orders. The objective for doing this was to ensure that lawyers or litigants do not have to come in physically for carrying out their responsibilities such as filing petitions, applications, suits & etc within the period of limitation prescribed under the general law of limitation or under Special Laws.
- On 24th March, 2020: The Honourable Finance Minister made an announcement for the minimum default threshold to trigger insolvency to be Rs. 1 crore instead of 1 lakh.
The minimum insolvency threshold was increased to 1crore because it will prevent the MSME (Ministry of Micro, Small & Medium Enterprises) sector from being brought under the insolvency proceedings as per the IBC (Insolvency & Bankruptcy Code of 2016). Since many existing & emerging countries were facing financial & economic problems, this will help them by preventing insolvency.
- On 27th March, 2020: RBI brought in Statements for the Developmental & Regulatory Policies.
These statements of policies brought up by the RBI were to directly address the stress of financial conditions of people caused by the outbreak of COVID-19. In para number 5, it said that all the banks, financial institutions, and NBFCs are allowed to extend the repayment period of loans by 3 months and all the subsequent due date & other things in the repayment schedule can also be shifted 3 months ahead.
- On 30th March, 2020: Suo Moto Order of NCLAT to exclude the lockdown period from the CIRP (Corporate Insolvency Resolution Process).
The period of lockdown which was ordered by the Central & the State Governments including the period which might be extended in the future either in whole or part of the country shall be excluded from the purpose of counting of the period for the resolution process which was stated under the Section 12 of the IBC or Insolvency & Bankruptcy Code, 2016 in all cases where this whole ‘Corporate Insolvency Resolution Process’ has already been initiated or is pending.
- 17th April, 2020: The IBBI’s Liquidation Process & Second Amendment Regulations, 2020 notified to exclude the period of lockdown from the computation of timeline in the liquidation procedure.
This regulation provides that the period of lockdown will not be counted for the purposes of computing the time-line for any of the tasks that were not completed because of the lockdown, in relation to any part of the liquidation procedure. The IBBI Liquidation Process Second Amendment Regulations 2020 states that the period of the lockdown caused because of the COVID-19 pandemic shall not be counted for computation of any & all tasks which were delayed to be completed because of the lockdown.
- On 10th July, 2020: Insolvency and Bankruptcy Board of India (Online Delivery of Educational Course & Continuing Professional Education by Insolvency Professional Agencies & Registered Valuers Organisations) Guidelines, 2020 were issued by IBBI.
It is mentioned in the guidelines that it would be difficult for the RVOs (Registered Valuers Organisations) and the IPAs (Insolvency Professional Agencies) of the country to deliver educational courses & continuing professional education through offline classroom mode due to social distancing norms made compulsory by the Central Government and so, to minimize the difficulties for the registered valuers, IPs, valuer members and prospective IPs, the Board, vide its advisories Number IBBI/IPA/031/2020 dated 20th March, 2020 and Number IBBI/RVO/032/2020 dated 20th March, 2020, both allowed the online delivery of education courses by RVOs and IPAs and continuing the education facility by RVOs till the 30th of September, 2020. One thing required was that the quality of education should be the same as the offline classroom mode.
These Guidelines will stay effective till 31st March 2021, unless they are rescinded or extended otherwise.
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