Finance Minister Nirmala Sitharaman on Saturdad stated regulation provides for carrying out insolvency and bankruptcy proceedings towards company debtors as well personal guarantors together.

She was replying to a debate at the Insolvency and Bankruptcy Code (Second Amendment) Bill, 2020, withinside the Rajya Sabha which exceeded the proposed rules to update an ordinance on this regard with voice vote.

“The corporate debtor often has guarantors. So for comprehensive corporate insolvency resolution and liquidation we felt it was necessary that the insolvency of the corporate debtor as well as its guarantors are considered together to whatever extent it is possible,” Sitharaman said in response to some members raising the issue.

In June, an ordinance was promulgated to amend the Insolvency and Bankruptcy Code (IBC) wherein fresh insolvency lawsuits will not be initiated for at least six months beginning from March 25 amid the coronavirus pandemic.

Default on repayments from March 25, the day while the national lockdown started out to minimize coronavirus infections, might not be taken into consideration for beginning insolvency proceedings for at least six months.

The minister additionally clarified that insolvency lawsuits towards corporates defaulting on loans prior to March 25 will hold and the modification will not stall those cases.

“Priority is to keep the company to be a going concern rather than to liquidate them at the earliest,” she said adding that 258 companies were saved from going bankrupt through the IBC process, while 965 firms went for liquidation.

“…258 companies were rescued which means employment is back again with them. Companies which have been liquidated in total, three-fourths of them were defunct and were also given liquidation solution and therefore at least loss of employment was reduced,” she said.

According to her, 258 organizations rescued had property of ₹96,000 crore and the 965 organizations despatched for liquidation had property of ₹38,000 crore.