MINISTRY OF LAW AND JUSTICE

(Legislative Department)

New Delhi, the 23rd September, 2020/Asvina 1, 1942 (Saka)

The following Act of Parliament received the assent of the President on the 23rd September, 2020 and is hereby published for general information:-

THE INSOLVENCY AND BANKRUPTCY CODE

(SECOND AMENDMENT) ACT, 2020

NO. 17 OF 2020

[23rd September, 2020.]

An Act further to amend the Insolvency and Bankruptcy Code, 2016.

BE it enacted by Parliament in the Seventy-first Year of the Republic of India as follows:-

Short title and commencement.

1. (1) This Act may be called the Insolvency and Bankruptcy Code (Second Amendment) Act, 2020.

    (2) It shall be deemed to have come into force on the 5th day of June, 2020.

Insertion of new section 10A.

2. After section 10 of the Insolvency and Bankruptcy Code, 2016 (31 of 2016) (hereinafter referred to as the principal Act), the following section shall be inserted, namely:-

Suspension of initiation of corporate insolvency resolution process.

"10A. Notwithstanding anything contained in sections 7, 9 and 10, no application for initiation of corporate insolvency resolution process of a corporate debtor shall be filed, for any default arising on or after 25th March, 2020 for a period of six months or such further period, not exceeding one year from such date, as may be notified in this behalf:

Provided that no application shall ever be filed for initiation of corporate insolvency resolution process of a corporate debtor for the said default occurring during the said period.

Explanation.-For the removal of doubts, it is hereby clarified that the provisions of this section shall not apply to any default committed under the said sections before 25th March, 2020.".

Amendment of section 66

3. In section 66 of the principal Act, after sub-section (2), the following sub-section shall be inserted, namely:-

"(3) Notwithstanding anything contained in this section, no application shall be filed by a resolution professional under sub-section (2), in respect of such default against which initiation of corporate insolvency resolution process is suspended as per section 10A.".

Repeal and savings.

4. (1) The Insolvency and Bankruptcy Code (Amendment) Ordinance, 2020 (Ord. 9 of 2020) is hereby repealed.

    (2) Notwithstanding such repeal, anything done or any action taken under the said Ordinance shall be deemed to have been done or taken under this Act.

Suspension of corporate insolvency proceedings prevents filing for defaults occurring during the pandemic period and bars related avoidance actions. The Act inserts section 10A suspending initiation of corporate insolvency resolution processes for defaults arising on or after 25th March, 2020 for an initial six month period, extendable up to one year, and clarifies that defaults during that period cannot thereafter be the subject of such initiation while defaults before that date remain actionable; it also bars resolution professionals from filing avoidance or misfeasance applications in respect of suspended defaults and repeals the earlier Ordinance with savings for actions taken under it.