Application of Corporate Insolvency Resolution process of the Insolvency & Bankruptcy Code 2016 [ Section 4 ] - Insolvency Resolution And Liquidation For Corporate Persons - IBC

Application of Corporate Insolvency Resolution process of the Insolvency Bankruptcy Code 2016 Meaning of Default Default is defined in section 3(12) of the IBC as non-payment of a debt when the whole or any part or installment of the amount of debt has become due and payable, and is not paid by the debtor or the CD, as the case may be. Threshold Limit for Default Section 4 of the IBC provides that Part II of the IBC (which deals with the CIRP and liquidations) shall apply to matters relating to the insolvency and liquidation of CDs where the minimum amount of the default is Rs. 100,000/-. The Central Government may, by notification, specify a higher minimum amount, but it shall not be more than Rs. 1 Crore for matters relating to the prepackaged insolvency resolution process of corporate debtors under Chapter III-A ; All other cases. Increase Threshold limit for Default in COVID -19 period for specified period Extension Recognizing the stress faced by companies as a result of COVID-19 , the Central Government passed a notification No. S.O. 1205 (E). - Dated: 24-3-2020 increasing the threshold of default to Rs. 1 Crore. By the Notification S.O. 1543(E) , dated 09.04.2021, the Central Government has specified ten lakh rupees as the minimum amount of default for the matters relating to the pre-packaged insolvency resolution process of corporate debtor under Chapter III-A of the Code. Extension of Default time period [ Notification No. S.O. 4638(E), dated 22nd December, 2020 ] The Central Government had notified further period of three months from the 25th December, 2020, for the purposes of the said section. This Section was inserted on account of pandemic situation on account of COVID-19 all over India. The Notification also extended the period form 25th December, 2020 i.e. 25th March, 2021 which has now gone, so the applicability of it has become redundant. Provisions related to Insolvency Resolution and Liquidation process for Corporate Persons are covered in Part II of the Code. This part comprises of seven chapters with section 4 to 77 of the Code. Each chapter deals with different issues relating to Insolvency Resolution and liquidation of corporate persons.