New Delhi, Business Desk. On the first day of the self-sufficient India package, the government took steps to address the financial crisis of the MSME sector, and on Saturday, on the last day, it has arranged to end the fear of bankrupt law. Due to Covid-19, there are indications of many financial crises facing small and medium companies. There is a danger that a large-scale insolvency law (IBC) can be enforced against these companies. To reduce this danger, the government has now allowed cases of more than one crore rupees to be taken under the insolvency process. The limit till now was one lakh rupees.
In addition, Finance Minister Nirmala Sitharaman on Sunday said that the new insolvency process is being put on hold for a year. This step has been taken in view of the situation of Kovid-19. He has indicated that companies whose financial condition has deteriorated due to Kovid-19 will be given special relief from this rule. Necessary amendments will be made to the IBC for all these provisions. The ordinance will be brought for this now. Through the ordinance, the central government will also be empowered to exclude loans related to Kovid-19 from the definition of IBC. That is, if a company’s gardener is spoiled due to Kovid-19, then action cannot be taken against him under the Insolvency Act.
The government will also make some amendments to Section 240-A of the IBC to make the Special Insolvency Resolution Framework for MSMEs as per the circumstances arising out of Kovid-19. This will help a large number of MSMEs to get relief from insolvency law, as action can be taken against the companies only if there is an outstanding of at least one crore rupees. The Finance Minister said that the said step has been taken under ‘Ease of Doing Business’. In this context, the company law has also made several amendments.