SME Times News Bureau | 17 May, 2020
In a major relief for businesses, Finance Minister Nirmala Sitharaman on
Sunday announced that no fresh insolvency case will be admitted for the
next one year in view of the coronavirus pandemic.
The government had earlier suspended any fresh admission for six months.
Further, the government will also set up a special insolvency framework
for MSMEs under Section 240A of the Insolvency of Bankruptcy Code. This
has been a long pending demand of the industry and economists.
The threshold for insolvency will also be raised to Rs one crore from
the current Rs one lakh which will be supportive for the MSME sector.
Further, the debt occurring due to the coronavirus pandemic will not be
categorized as "default", thereby will be insulated from triggering
insolvency proceedings.
The changes would implemented through
promulgation of ordinance subject to a ratification by the Parliament
later so that things move quickly, Sitharaman said.
The
decision comes under the fifth and the final tranche of Rs 20 lakh crore
economic package announced by Prime Minister Narendra Modi on Tuesday.