Finance Minister Nirmala Sitharaman said on Saturday that simultaneous insolvency action can be taken against companies defaulting in loan payments and personal guarantors under the Insolvency and Bankruptcy Code (IBC). Sitharaman said this while replying to the discussion on the Insolvency and Bankruptcy Code (Second Amendment) Bill, 2020 in the Rajya Sabha on Saturday. This bill was passed by voice vote in Rajya Sabha. This bill will replace the ordinance brought in June in this regard.
On the issue raised by some members, Sitharaman said on Saturday that many times there are some guarantors towards companies taking loans. In such a situation, for the purpose of Comprehensive Corporate Insolvency Resolution and Liquidation, he believes that, as far as possible, insolvency action should be taken against the corporate debtor and its guarantor.
The government brought an ordinance in June to amend the IBC. Under this, a provision was made that no new bankruptcy action will be started from March 25 due to the corona virus epidemic for six months. The lockdown was imposed on 25 March to prevent the spread of corona virus in the country. The Finance Minister made it clear that action will be continued against the companies who defaulted in repayment of debt before 25 March. He said that such companies will not get relief from this amendment.
