Parliament on Monday approved the Insolvency and Bankruptcy Code (Second Amendment) Bill, 2020, whereby fresh insolvency proceedings will not be initiated for at least six months starting from March 25 in view of the coronavirus pandemic. Replying to a debate on the bill in the Lok Sabha, Finance Minister Nirmala Sitharaman said the amendments would provide relief to companies reeling under the impact of the coronavirus pandemic.
The bill seeking to replace the Ordinance was later approved by the Lok Sabha. The Rajya Sabha has already approved in the bill on Saturday. The bill mandates that a default on repayments from March 25, the day when a nationwide lockdown began to curb the spread of coronavirus, would not be considered for initiating insolvency proceedings for at least six months.
The Congress on dubbed the government as “ordinance-savvy", accusing it of promulgating one ordinance after another under the pretext of the COVID-19 crisis. Speaking in Lok Sabha during a discussion, its leader Adhir Ranjan Chowdhury said the constitutional measure of bringing ordinance should be resorted to as an exception and not rule.
Criticising the bill, which replaces an ordinance, he said it is “weakly constructed with minimum logic and a lot of grey area". “It is nothing but is aimed to patronise their (government) preferred corporates," he alleged, adding the MSME sector will be its worst casualty.
“The bill does not safeguard any stakeholder, and the government is trying to save corporate debtors," he alleged. He also claimed that under the Corporate Insolvency Resolution Process (CRIP), the success rate has been very low.
“There has been a “poor and dismal" performance under you," he said, referring to Finance Minister Nirmala Sitharaman.