IBC will not constitute the debts related to COVID-19 pandemic in the default category

No insolvency proceedings to be initiated for at least a year. The minimum threshold for initiating IBC proceedings inflated from Rs 1 lakh to Rs 1 crore.

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Source: Business Today

Lately, this Sunday, the government announced that for one year, debts related to the COVID-19 pandemic will not be included in the default category under IBC (Insolvency and Bankruptcy Code). Further, it also confirmed to pass an ordinance soon to ensure that no insolvency proceedings will be initiated for at least a year in the wake of coronavirus outspread.

Also considering the losses caused by the complete shutdown to MSMEs (Micro, small and medium-sized enterprises), the minimum threshold for initiating IBC proceedings has been inflated from Rs 1 lakh to Rs 1 crore.

These announcements were carved in the fifth and final brief of economic measures by Finance Minister Nirmala Sitharaman for the press under the Atma Nirbhar Bharat Abhiyan package. She said that these measures are oriented in easing the running businesses and startups across the country.

The other prominent declarations of the briefings were e funding of Rs 40,000 crore to be made to MNREGA to increase the number of jobs offered, an increase from 3 to 5% in borrowing limits of States from their SDP, increment in the public health expenditures.