Covid-19: Lockdown period not to be counted for certain corporate insolvency timelines

KR Srivats New Delhi | Updated on March 30, 2020 Published on March 30, 2020

The Insolvency and Bankruptcy Board of India (IBBI) has now ruled that the 21-day national lockdown period will not be counted for the purpose of timeline of completion of any activity under the corporate insolvency resolution process (CIRP) regulations.

However, the overall timeline prescribed under the Insolvency and Bankruptcy Code (IBC) such as 180 days, 270 days or 330 days will remain and have to be adhered to, said IBBI.

The insolvency regulator has allowed an extension in the timelines of various activities such as invitation, submission and verification of claims, preparation of memorandum, constitution of the committee of creditors, appointment of resolution professionals to replace interim resolution professional and invitation and receipt of expression of interest and resolution plans.

“The overall timeline for completing the CIRP, however, remains unchanged and can be extended only by an amendment to the IBC or judicially by the Supreme Court,” Gaurav Gupte, Partner, Cyril Amarchand Mangaldas told BusinessLine.

Depending on further developments, the regulator may have to consider extending timelines for specific activities in respect of lockdowns imposed by State governments or local governments as well, he said.

For instance, it may not be possible to complete valuation if the area where the assets of the company are situated continues to be in lockdown even after the national lockdown is lifted, said Gupte. The IBBI may also consider extending timelines under liquidation regulations, he added.

Aseem Chawla, Managing Partner, ASC Legal, said that the latest IBBI move highlights the much-needed respite due to preventive lockdown and suggests that the lockdown period would not be reckoned in calculating the time limit envisioned in the resolution process for accomplishment of various tasks provided the overall time limit is met.

Misha, Partner, Shardul Amarchand Mangaldas & Co, a law firm, added that timelines provided under the IBC have not been relaxed - the CIRP has to be completed within a period of 180 days extendable up to 270 days. Also, the entire CIRP including legal proceedings have to be completed within period of 330 days, Misha added.

Meanwhile, the National Company Law Appellate Tribunal (NCLAT) on Monday said that the lockdown period, including the period as may be extended in whole or part of the country where the registered office of the company may be located, would be excluded for the purpose of counting of the period of CIRP. This will be allowed in all cases where CIRP has been initiated and pending before any bench of NCLT or in appeal before NCLAT.

Published on March 30, 2020

A letter from the Editor

Dear Readers,

The coronavirus crisis has changed the world completely in the last few months. All of us have been locked into our homes, economic activity has come to a near standstill. Everyone has been impacted.

Including your favourite business and financial newspaper. Our printing and distribution chains have been severely disrupted across the country, leaving readers without access to newspapers. Newspaper delivery agents have also been unable to service their customers because of multiple restrictions.

In these difficult times, we, at BusinessLine have been working continuously every day so that you are informed about all the developments – whether on the pandemic, on policy responses, or the impact on the world of business and finance. Our team has been working round the clock to keep track of developments so that you – the reader – gets accurate information and actionable insights so that you can protect your jobs, businesses, finances and investments.

We are trying our best to ensure the newspaper reaches your hands every day. We have also ensured that even if your paper is not delivered, you can access BusinessLine in the e-paper format – just as it appears in print. Our website and apps too, are updated every minute, so that you can access the information you want anywhere, anytime.

But all this comes at a heavy cost. As you are aware, the lockdowns have wiped out almost all our entire revenue stream. Sustaining our quality journalism has become extremely challenging. That we have managed so far is thanks to your support. I thank all our subscribers – print and digital – for your support.

I appeal to all or readers to help us navigate these challenging times and help sustain one of the truly independent and credible voices in the world of Indian journalism. Doing so is easy. You can help us enormously simply by subscribing to our digital or e-paper editions. We offer several affordable subscription plans for our website, which includes Portfolio, our investment advisory section that offers rich investment advice from our highly qualified, in-house Research Bureau, the only such team in the Indian newspaper industry.

A little help from you can make a huge difference to the cause of quality journalism!

Support Quality Journalism
This article is closed for comments.
Please Email the Editor
You have read 1 out of 3 free articles for this week. For full access, please subscribe and get unlimited access to all sections.