All companies important for India, need solutions: Sitharaman


New Delhi, Sep 21 (IANS): 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 liquidation, has to have a solution.

"Your friend, my friend does not matter. All are friends of this country. Unless a business is run by small, medium or big, that kind of a job which we are talking about will not happen. So, a 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. 

  

Comment on this article

  • Mangalurian, Mangaluru

    Tue, Sep 22 2020

    Sithamma said even "micro or nano" businesses are important for the country.

    But the recent policies, including the merciless implementation of the GST in this sector, killed the micro/nano-sized businesses.

    Over 50% of India's businesses exist in the informal sector. Government wanted to make big money out of them by forcing them to come under the GST (and other formal instruments). The Government killed the golden goose.

    DisAgree Agree [9] Reply Report Abuse

  • Sunil K, Mangalore

    Tue, Sep 22 2020

    Solution is simple - Nirmala Sitharaman needs to resign as FM. Give Piyush Goyal (Chartered Accountant) a chance - lets see if he can get the economy back on track again from current negative territory.

    DisAgree Agree [6] Reply Report Abuse

  • Veer, Nagpur

    Tue, Sep 22 2020

    You don't even have data how many companies are existing and how many are non existing to start with. So, how can a company be recognized and identified itself?????????..You are only interested in collecting GST without knowing where it comes from and whether it is licenced and registered with you. Only a competent and efficient govt can do this.

    DisAgree Agree [8] Reply Report Abuse


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