The present times have been trying and tiresome for one and all alike, and the corporate world is no different. The Covid-19 Pandemic has brought with itself unforeseen turbulences and while everyone, at every stage is trying its best to cope with the harsh financial conditions, the medium and small business have been the hardest hit.
Keeping in view the interest of the small business owners and companies to survive the economic backlash due to the global pandemic, the Central Government through gazette notification dated March 24, 2020, has specified Rs. 1,00,00,000 (Rupees One Crore) as the minimum amount of default for the purposes of triggering insolvency which is a Hundred fold increase in the erstwhile specified value of default, i.e. Rs. 1,00,000 (Rs. One Lakh). (Central Government Notification – IBC 24.03.2020 )
The revision of threshold will indeed come as a boon for small and medium sized companies, which have been consistently plagued by the threats of initiation of Corporate Insolvency Resolution Processes during these tough times.
It is also important to note that the Govt. to further placate and soothe the sustenance of the small and medium sized companies has also suggested that it may suspend filing of any fresh application under section 7, 9 or 10, if situation so demands for a period of 6 months, although no steps have been taken in this regard as of now.
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