Finance Minister Nirmala Sitharaman on May 17 said debts related to COVID-19 will be excluded from the "default" category under the Insolvency and Bankruptcy Code for a period of upto 1 year.
Sitharaman also said the minimum threshold to initiate insolvency proceedings has been raised to Rs 1 crore from Rs 1 lakh, which will insulate micro, small and medium enterprises (MSMEs).
This could mean that the Centre will have to amend Section 7, 9 and 10 of the IBC, possibly through an Ordinance to enable the suspension.
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No fresh insolvency proceedings will be initiated upto one year, depending upon the pandemic situation, Sitharaman added.