In the last press conference of the series for explaining Aatma Nirbhar Bharat economic package of Rs 20 lakh crore package, Finance Minister Nirmala Sitharaman made it clear that no fresh insolvency proceedings will be initiated against any companies impacted due to COVID-19 for up to one year.
The minister also stated that the minimum threshold to initiate insolvency proceedings be raised to Rs 1 crore (from Rs 1 lakh, which largely insulates MSMEs).
The union minister added that debts related to COVID-19 will be excluded from the ‘default’ category under Insolvency and Bankruptcy Code (IBC).
She added the special insolvency resolution framework for MSMEs under Section 240A of the Code to be notified soon. “There is no clarity on how long it will take for companies to recover. So, this decision was taken.” She added this law will be passed as an ordinance. “We will take it to the Parliament when it resumes.”