Rajya Sabha passes Insolvency and Bankruptcy Code (Second Amendment) Bill, 2020

New Delhi: The Rajya Sabha on Saturday (September 19) passed the Insolvency and Bankruptcy Code (Second Amendment) Bill, 2020. The Bill was tabled by Finance Minister Nirmala Sitharaman amends the Insolvency and Bankruptcy Code 2016 which provides a time-bound process for resolving insolvency in companies and among individuals. 

During the discussion, Congress MP Vivek Tankha questioned several provisions of the Bill urging that these must be relooked for the interest of the public. He said that the new amendments will only benefit the big companies and prove to be detrimental for the small companies including MSMEs. 

Joing the discussion, Dinesh Trivedi of TMC said that legislation must not be brought in hurry without larger consultation. Samajwadi Party MP Ravi Prakash Verma said that NPA is continuously rising in the country and the number of willful defaulters has also increased.

Supporting the bill, Arun Singh of BJP said that the Insolvency and Bankruptcy Bill as a remarkable and bold step and lauded his government saying that India’s ranking in Ease of Doing Business has improved under the present regime.

Replying to a debate on the Bill in the Upper House, Finance Minister Nirmala Sitharaman said the intention of the IBC is to keep companies a "going concern" and not liquidate them.

The Bill mandates that a default on repayments from March 25, the day when a nationwide lockdown began to curb the spread of coronavirus, would not be considered for initiating insolvency proceedings for at least six months. The central government may extend this period to one year through notification.

The Bill seeks to temporarily suspend initiation of the corporate insolvency resolution process, CIRP under the Code.  It replaces the Insolvency and Bankruptcy Code (Amendment) Ordinance, 2020 promulgated in June this year.