Insolvency Bill would protect companies from being dragged to court

The passing of the Insolvency and Bankruptcy Code Amendment Bill gives the much – needed immunity or exemption to stressed companies from being pushed into insolvency, stated Dr Niranjan Hiranandani, the National president of apex industry body, ASSOCHAM.

He stated that after the amendment in Insolvency and Bankruptcy Code, fresh insolvency proceedings will not be initiated for at least 6 months, and extendable to one year commencing from March 25, 2020 which will provide a much-needed breather to the industry.

“It will give a cushion effect to hundreds of Micro, small, medium companies who are struggling to keep their business afloat. This move is to help companies to tide over the unusual circumstances caused due to COVID 19 pandemic and the subsequent lockdown to handle the same,” Dr. Hiranandani said.

The Rajya Sabha had passed the bill on Saturday while it was cleared by the Lok Sabha on Monday. The main aim of the bill is to stop all insolvency proceedings for companies from March 25 and prevent companies from going bankrupt.

He further stated that while these measures are welcome, the industry also expects the government to take concrete steps to boost demand for goods and services in the economy. “Only once the demand for services grows in various sectors, will there be a revival in the economy. Else, we anticipate the number of filings to go up once the leniency period comes to an end,” he added.