The Insolvency and Bankruptcy Board of India (IBBI) has amended regulations to exclude the ongoing national lockdown period from the timeframe specified in rules for completing various tasks related to bankruptcy resolution and liquidation of companies.
Bankruptcy rule maker, the IBBI, on Friday notified separate amendments to regulations– Insolvency Resolution Process for Corporate Persons Regulations, 2016 and Liquidation Process Regulations, 2016 to ensure the lock down period is not counted while calculating the timelines prescribed for specified tasks. The changes are effective from 29 March.
While the Bankruptcy Code prescribes a 330 day time frame for resolving a bankruptcy, regulations prescribe timelines for various steps involved in the process. The idea is to avoid hardships arising in meeting the timelines due to the national lockdown since 25 March aimed at containing the spread of Coronavirus.
IBBI regulations require that the corporate liquidation process should be completed in a period of one year unless extended by the National Company Law Tribunal. It also specifies a model timeline within which various tasks that are part of the liquidation process should be completed, explained Gaurav Gupte, partner at law firm Cyril Amarchand Mangaldas. The amendment to the liquidation regulations has the effect of excluding the period of the national lockdown from any computation of time under the liquidation regulations, said Gupte.
The government recently brought out the Taxation and Other Laws (Relaxation of certain provisions) Ordinance, 2020 to ease various statutory compliance requirements in view of the lockdown. Tax payers have been given extra time to make investments to claim tax relief for FY20 income. Also, businesses have been given extra time for filing various statutory submissions.