The Insolvency and Bankruptcy Code Bill, 2020 passed recently has affected the Corporate Insolvency Resolution Process (CIRP).
The Bill clarified the insolvency commencement date which would be the date of admission of the application for initiating CIRP. Previously, it used to commence when the Insolvency Resolution Professional was appointed by the adjudicating authority. This Code allows the creditors to initiate the CIRP if the amount of default is at least one lakh rupees but this Bill added an additional requirement for some of the creditors which include real estate allottees and security holders etc. to file the same i.e. these applications shall be filed jointly by at least 100 such creditors or 10% of their number, whichever is less. This Bill further clarifies that the corporate debtors shall not prevented to file for CIRP against other corporate debtors. Also, it provides that the Company shall not be liable for any offence committed before the commencement of the CIRP and offers immunity to the Company from attachment, seizure, retention or confiscation of their property in relation to such offences.
The main objective of the Bill was to ease the CIRP and to provide priority to the corporate debtors and to disallow the abuse of the Code by some of the financial creditors. It also provides immunity and action against the prosecution and property respectively, of the corporate debtor.
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