With reference to ordinance to amend Insolvency and Bankruptcy Code consider following statements Un...........

Economic Affairs Public Finance and Debt Management

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With reference to ordinance to amend Insolvency and Bankruptcy Code, consider following statements

Under it, fresh insolvency proceedings, it will not be initiated against companies for defaults due to the COVID-19 pandemic.
It suspends sections 7, 9 and 10 of the IBC for a period of 6 months.

Select the correct statement.

1 only

2 only

Both

None

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Explanation:

Union Government has promulgated an ordinance to amend Insolvency and Bankruptcy Code (IBC). Under it, fresh insolvency proceedings under the Insolvency and Bankruptcy Code (IBC) will not be initiated against companies for defaults due to the COVID-19 pandemic. Default on repayments from 25th of March, the day when the nationwide lockdown began to curb Corona virus infections, will not be considered for initiating insolvency proceedings for a period of six months, which could be extended to one year. It suspends sections 7,9 and 10 of the IBC for a period of 6 months with an enabling provision allowing for it to be extended upto 1 year. Under the IBC, an entity can seek insolvency proceedings against a company even if the default is only one day. This is subject to the minimum threshold of Rs 1 crore. Earlier, the threshold was Rs 1 lakh. Hence both statements are correct.