The Insolvency and Bankruptcy Board of India (hereinafter referred to as ‘IBBI’) vide its notification dated March 29, 2020 has issued clarification regarding the period of exclusion for Insolvency Resolution Process. Through, the issuance of the above mentioned notification, the IBBI has amended the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 to include the following:
- The period of lockdown imposed in the wake of COVID-19 outbreak shall not be counted for the purposes of the time-line for any activity that could not be completed due to such lockdown, in relation to a Corporate Insolvency Resolution Process (hereinafter referred to as ‘CIRP’) under the Insolvency & Bankruptcy Code, 2016.
- The said exclusion has been introduced as Regulation 40C in the Insolvency and Bankruptcy Code by the IBBI in exercise of the powers conferred by section 196(1)(t) read with section 240 of the Insolvency and Bankruptcy Code.
- The above amendment shall come into force from March 29, 2020.
CIRP is the resolution process initiated by the National Company Law Tribunal when a company defaults in making payments to its creditors. As per the prevalent laws, the CIRP has to be completed within 180 days to 90 days depending upon the nature of the company.
However, with the said notification being introduced, the period of lockdown due to the COVID-19 outbreak will not be considered as part of CIRP timeline, hence giving much needed relief to the companies during this time of distress.