Government of India decides to exempt all debts related to COVID-19

by | May 19, 2020

The Indian government’s decision to exempt all debts related to Covid-19 from the definition of default under the Insolvency and Bankruptcy Code (IBC) and to suspend new cases for a year seems to be a risky proposition as this will put undue pressure on banks and financial institutions (FIs) pursuing the restructuring of their debtors.

The suspension of new IBC cases for a year will increase the overall number of NPAs, and even robust banks and FIs run the risk of balance sheet deterioration and being taken for granted by their customers.

In fact, this is the time when debt restructuring through the IBC to keep good businesses alive should be given the highest priority.

We hope the government reconsiders this move.

More News

ITR World Tax – 2024 Rankings

We are pleased to share that the firm has been ranked by ITR World Tax for our work in Indirect Tax, General Corporate Tax and Transfer Pricing. Congratulations to our team for their work and accomplishments. Ravi S. Raghavan, Partner - Tax and Private Client Group,...

read more

India – Arbitration Update

In the recent ruling of Orissa Metaliks Pvt. Ltd. v. SBW Electro Mechanics Import Export Corporation (2023 SCC OnLine Cal 1583), the Calcutta High Court (HC), in deciding the validity of an arbitration clause, has held that the venue of the arbitral proceedings must...

read more