The Insolvency and Bankruptcy Code (Second Amendment) Bill, 2020 |The LexSphere Library

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•THE INSOLVENCY AND BANKRUPTCY CODE

•(SECOND AMENDMENT) BILL, 2020

•A

•BILL

•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:—

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4.The Insolvency and Bankruptcy Code (Second Amendment) Bill, 2020 which seeks

•to replace aforesaid Ordinance, inter alia, provide for the following, namely:—

(a)to insert a new section 10A in the Code to provide for temporary

•suspension of sections 7, 9 and 10 in respect of 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; and

(b)to insert a new sub-section ( 3), in section 66 of the Code to provide

•that 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.

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5.The Bill seeks to achieve the above objectives.

•N

•EW D ELHI; NIRMALA SITHARAMAN.

•The 9th September, 2020.

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•FINANCIAL MEMORANDUM

•The Bill, if enacted, would not involve any expenditure, either recurring or non-recurring

•from the Consolidated Fund of India.

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•MEMORANDUM REGARDING DELEGATED LEGISLATION

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•Clause 2 of the Bill seeks to insert a new section 10A after section 10 of the Code which

•confers power to the Central Government to notify such other date, not exceeding one year

•for any default arising on or after the 25th March, 2020 for which application for initiation of

•corporate insolvency resolution process under sections 7, 9 and 10 shall not be filed.

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2.The matter in respect of which the above mentioned notification may be made is of

•procedure and administrative detail, and as such, it is not practical to provide for them in the

•proposed Bill itself. The delegation of legislative power is, therefore, of a normal character.

•RAJYA SABHA

•————

•A

•BILL

•further to amend the Insolvency and Bankruptcy Code, 2016.

•————

•(Smt. Nirmala Sitharaman, Minister of Finance and Minister of Corporate Affairs)

•MGIPMRND—418RS(S3)—11-09-2020.

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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.

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2.After section 10 of the principal Act, the following section shall be inserted,

•namely:—

•"10A. ( 1) 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:

•Short title and

commencement.

•Insertion of new

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•section 10A.

•Suspension of

•initiation of

•corporate

•insolvency

•resolution

process.

•AS INTRODUCED IN THE RAJYA SABHA

•Bill No. XXXI of 2020

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•10

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•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.".

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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.".

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4.(1) The Insolvency and Bankruptcy Code (Amendment) Ordinance, 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.

•Amendment of

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•section 66.

Ord.9 of 2020.Repeal and

savings.

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•STA TEMENT OF OBJECTS AND REASONS

•The Insolvency and Bankruptcy Code, 2016 (the Code) was enacted to consolidate

•and amend the laws relating to reorganisation and insolvency resolution of corporate persons,

•partnership firms and individuals in a time-bound manner for maximisation of value of assets

•of such persons, to promote entrepreneurship, availability of credit and balance the interests

•of all the stakeholders including alteration in the order of priority of payment of Government

•dues and to establish an Insolvency and Bankruptcy Board of India.

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2.In the light of the extraordinary economic situation caused by COVID-19 pandemic,

•a need was felt to temporarily suspend initiation of corporate insolvency resolution process

•under the Code, initially for a period of six months or such further period, not exceeding one

•year from 25th March, 2020, to provide relief to companies affected by COVID-19 to recover

•from the financial stress without facing immediate threat of being pushed to insolvency

proceedings.The benefit of the above said suspension will be available to all those defaults

•of the corporate debtor that occur from 25th March, 2020 and till the end of the period of

suspension.

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3.In the aforesaid circumstances, it has become necessary to amend certain provisions

•of the Code. However, as the Parliament was not in session and immediate action was

•required to be taken, the Insolvency and Bankruptcy Code (Amendment) Ordinance, 2020

•was promulgated by the President on the 5th day of June, 2020.