Preserve the IBC

Suspension should not result in unintended consequences

The Union Cabinet has cleared the proposal to suspend the Insolvency and Bankruptcy Code (IBC) for six months, and it can be extended up to a year. The changes are likely to be implemented through an Ordinance. The purpose behind suspending the IBC is not very difficult to understand. Companies are facing significant disruption on account of the nationwide lockdown and other measures taken by the government to contain the spread of Covid-19. The government is also working on a special resolution framework for micro, small, and medium enterprises, while the threshold for triggering the insolvency process has been increased