Coronavirus: IBBI amends CIRP Regulations to provide relief in the corporate insolvency resolution process

To address the difficulty being faced by the lockdown due to novel Coronavirus, COVID-19, the Insolvency and Bankruptcy Board of India (IBBI) on Monday amended the corporate insolvency resolution process (CIRP) regulations. IBBI has announced that the nationwide lockdown, which will last until April 14, 2020, will not be counted towards timelines in the CIRP under the Insolvency and Bankruptcy Code (IBC). This would, however, be subject to the overall time-limit provided in the Code.

The IBBI amended the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 (CIRP Regulations) on March 29, 2020. The amended regulations are effective from the same day, i.e. March 29, 2020.

The Union Government has declared a lockdown of twenty-one days with effect from March 25, 2020, as a measure to combat and contain the spread of COVID-19.

The IBBI in its notification has said, "It is difficult for the insolvency professionals to continue to conduct the process, for members of the committee of creditors to attend the meetings, and for prospective resolution applicants to prepare and submit resolution plans, during the period of lockdown. Therefore, it may be difficult to complete various activities during a corporate insolvency resolution process within the timelines specified in the CIRP Regulations."

This amendment in the IBC will be known as Regulation 40C, also known as the Insolvency and Bankruptcy Board of India Regulations 2020. Under the IBC, companies are given 330 days to finalize the CIRP, including the time taken for litigation and other judicial processes.

The amendment provides a breather of 17 days to the companies. As yet no information has been released on any further changes if the lockdown period is extended to after April 14.