Threshold enhanced with force majeure awaited in Insolvency & Bankruptcy Code(IBC) due to COVID-19

In order to check the economical slowdown in the business, the Finance Minister on 24th March,2020 has announced various reliefs and relaxations in IBC due to the pandemic outburst of Covid-19 as below:

On March 24, 2020, the Finance Minister announced several relief measures across sectors, relating to Statutory and Regulatory compliance matters, in view of the COVID-19 outbreak in the country. The main relief measures have been detailed below, along with their implications for businesses. 

THE ISSUE

In a recent judgment, i.e., on 17 January 2020, the Indian appellate insolvency tribunal, namely, the National Company Law Appellate Tribunal (NCLAT) held in M. Ravindranath Reddy v. G. Kishan, that the lease of immovable property cannot be considered as supply of goods or rendering any services and therefore the due amount cannot fall within the definition of operational debt under the Insolvency and Bankruptcy Code, 2016 (Code).

Revision of ECB framework: The Reserve Bank of India (RBI) on December 17, 2018 revised and consolidated the provisions related to borrowing and lending transactions into one single regulation i.e. the Foreign Exchange Management (Borrowing and Lending) Regulations, 2018 ("ECB Regulations").       

Banning of Unregulated Deposits Schemes Ordinance, 2019 By Sudish Sharma and Vishakha Singh

Indian economy in the recent times has witnessed a plethora of fraudulent corporate malpractices. The issue of illegal deposit-taking activities has been a concerning one, causing various financial frauds in forms of 'ponzi' schemes, 'chit funds' scams etc. There has been

a dire need to counter such illicit practices, and to

initiate another deterrent action against the black

money generated out of such illicit-deposit taking

Introduction:

Following are the various modes for existing business in India –

• Transfer of shares for exiting business in India
• Voluntary Liquidation in Existing Business in India
• Winding up by the National Company Law Tribunal when Exiting Business in India
• Other Options for Exiting Business in India

This article discusses all of the above mentioned points in greater detail-

Transfer of shares for exiting business in India

1. Legal provisions governing transfer of shares

It is now a settled position that the prime objective of the Insolvency and Bankruptcy Code, 2016 (“IBCâ€) is resolution or revival of the Corporate Debtor; followed by maximising the value of the assets of the Corporate Debtor; and lastly to promote entrepreneurship and availability of credit. The proceedings under the IBC are not intended to substitute recovery proceedings.

In order to facilitate the smooth conduct of business transactions the Government has put in numerous efforts in the form policies and regulations. While the greatest threat posed to the lenders in the modern market operations is the impact of non-performing assets or bad loans. In order to maximize the value assets in a time bound manner, the Government enforced the Insolvency and Bankruptcy Code, 2016 (hereinafter referred to as the 'IBC').

The Government has been working to facilitate the conduct of business in the country, thereby permitting a rapid boost to the Indian economy. Attributable to multiple factors such availability of multiple resources, friendly regulatory mechanism, easy availability of labour, has contributed towards the growth of the industrial sector. Numerous efforts made by the employees of the business corporates have accelerated the pace of development in the nation.

Labour welfare