In a view of the severe outbreak of second wave of coronavirus, the Association of Chambers of Commerce of India (ASSOCHAM) has approached the Finance Ministry with a plea to re-impose moratorium on taking debt-ridden companies to NCLT under the Insolvency and Bankruptcy Code (IBC) till December 2021.
"Given the increasing pressure on businesses, it would be imperative to extend the NCLT moratorium until December 2021 to ensure that the pandemic does not wreak havoc on the economy," the ASSOCHAM said in its representation to the Finance Ministry.
After a year-long moratorium on taking the financially stressed companies for NCLT resolution under IBC, the normalcy was restored in the last week of March 2021.
"The moratorium of NCLT was rightly lifted earlier in line with the opening of the economy," the ASSOCHAM said, however, adding the situation has reversed after the outbreak of the second wave of Covid-19.
It said the foray towards strong economic recovery, supported by timely economic and policy interventions, is now being met with a rise in COVID-19 cases across states.
In view of the altered situation, placing the NCLT resolution process under suspension again till December this year is a "critical interim measure" which needs to be expedited, until targeted assistance can be granted, after a comprehensive assessment.
The Chambers' secretary general, Deepak Sood said the government and the Reserve Bank of India (RBI) had been quite proactive in extending regulatory and fiscal support to the industry, particularly the MSMEs. However, the second wave has brought another bout of uncertainty. Though the country is better prepared with medical infrastructure and roll out of vaccination, the economy has to be ring-fenced for the sake of protecting jobs and businesses.
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