IBC Threshold increased: Implications
Vexatious initiation of insolvency process as arm-twisting tool, merely for recovery of dues has been a cause of concern since long due to low threshold of default of Rs.1 Lakh prescribed under the Insolvency and Bankruptcy Code, 2016 (IBC). While there was long outstanding demand for raising the threshold limit for initiating insolvency process, the notification has come in the wake of recent outbreak of the Coronavirus disease (COVID –19). The minimum default requirement under IBC now stands increased hundred times; from Rs.1 Lakh to Rs. 1 Crore.
Ministry of Corporate Affairs vide notification no. S.O. 1205(E) dated 24 March 2020 1 has amended Section 4 of the Insolvency and Bankruptcy Code, 2016 (IBC) vide which it has raised the threshold of default for filing of an insolvency petition under the Insolvency and Bankruptcy Code, 2016 (IBC) from Rs.1 Lakh to Rs. 1 Crore.
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