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All companies important for India: Sitharaman
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SME Times News Bureau | 22 Sep, 2020
Finance Minister Nirmala Sitharaman on Monday said that any company,
whether it is big, medium small, micro or nano, is important for the
country.
Saying that "my friends are the companies", she said
under the Companies Act, even MSMEs are registered and anybody who is
registered under this act and if, unfortunately, comes for a
liquidation, has to have a solution.
"Your friend, my friend
does not matter. All are friends of this country. Unless business is run
by small, medium or big, that kind of a job which we are talking about
will not happen. So, solution is required for everybody," the Minister
told the Lok Sabha while pushing for the passage of the Insolvency and
Bankruptcy Code (Second Amendment) Bill, 2020.
The Bill, which
was passed by the Rajya Sabha on Saturday, was later passed by the
house. It seeks to amend the Insolvency and Bankruptcy Code, 2016 and
replaces the Insolvency and Bankruptcy Code (Amendment) Ordinance, 2020
which was promulgated by the President on June 5 this year.
The
ordinance had prohibited the initiation of insolvency proceedings for
defaults arising during the six months from March 25 this year
(extendable up to one year).
Simply put, no insolvency
proceedings can be initiated by either the corporate debtor or any of
its creditors for defaults arising during this six-month period
beginning March 25.
The measure came in response to the Covid-19
pandemic, which had created uncertainty and stress for businesses for
reasons beyond their control. It was also felt that during the
Covid-19-induced lockdown, it may be difficult to find an adequate
number of resolution applicants to rescue the corporate debtor who may
default in discharging their debt.
Sitharaman said this is among
one of those Bills, now an act, which come very quickly each time when
the ground situation required changes, so that this becomes a robust
law.
Giving detailed reason behind the amendment, the Minister
said the need of such ordinance has never been contextual in last 100
years.
"Such kind of atmosphere cannot be in the coming 100 years too."
Indicating
Covid-19, the Minister said the dimension and the scale of the pandemic
was obvious and "therefore, we had to come up with an ordinance which
clearly suspended the application of three sections --7,9 and 10 -- of
the Insolvency and Bankruptcy Code.
"We had to prevent any
company which is experiencing distress because of the Covid getting over
being pushed into the insolvency proceedings. And therefore we had to
suspend these sections."
The Minister said the whole approach
that the government has taken is to immediately help them with some
relief, then look at the way in which the second phase can go on.
She
said this Bill is the part of the second approach. And the third phase,
Sitharaman said, is which they could have some kind of resolution
mechanism for those who are not able to survive and the hand holding in
particular incidences.
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