Amendments/Notifications in light of COVID-19 taken by the Hon’ble NCLAT
In light of the complete lockdown declared by the Government with effect from 25.03.2020, the National Company Law Appellate Tribunal (NCLAT) has taken Suo Moto cognizance of the unprecedented situation currently subsisting due to the spread of the Pandemic COVID-19 vide its Suo Moto – Company Appeal(AT) Insolvency No. 01 of 2020 dated 30.03.2020.
The Appellate Tribunal in exercise of its powers under Rule 11 of National Company Law Appellate Tribunal Rules, 2016 r/w the decision of this Appellate Tribunal rendered in “Quinn Logistics India Pvt. Ltd. vs. Mack Soft Tech Pvt. Ltd. In Company Appeal (AT) (Insolvency) No.185 of 2018” decided in May, 2018 has stated that the period of lockdown ordered by the Central Government and State Governments may be extended to the part of the country, where the registered office of the corporate debtor is located or to the whole country, and shall be excluded for the purpose of determining the period for resolution process under Section 12 of the Insolvency and Bankruptcy Code, 2016 in all cases where Corporate Insolvency Resolution Process (CIRP) has been initiated and is pending before any Bench of NCLT or in appeal at NCLAT.
It has further been stated that any Interim Order or Stay Order passed by NCLAT in any appeal under the Insolvency and Bankruptcy Code, 2016 shall continue till the next date of hearing, until further notifications.
The present order is much more clear and removes the scope of any ambiguity in interpreting the period that needs to be excluded from the ongoing Insolvency Processes under the Insolvency and Bankruptcy Code,2016.
The Insolvency and Bankruptcy Board of India (IBBI) makes further changes by amending the IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 in lines of inserting Regulation 40 C- Special Provision relating to time-line to of the Insolvency Process.
The new regulation prescribes that notwithstanding the timelines contained in the CIRP Regulations, the period of lockdown imposed by the Central Government in the wake of COVID-19 outbreak shall not be counted for the purposes of the timeline for any activity that could not be completed due to such lockdown in relation to an Insolvency Process.
With this amendment, one may be of the opinion that this relief is not a general moratorium on all the active Insolvency Processes and the prescribed timelines of 180 / 270 / 330 days in those matters. Instead this relief shall be available for extending/calculating timelines of an activity that could not be completed due to such lockdown.
It may also be noted that this relief is provided only for Insolvency Processes and not for Liquidation Processes.