An ordinance to suspend fresh filings under the Insolvency and Bankruptcy Code (IBC) by any category of creditors or even the corporate debtor for a period of six months is now imminent.
This is required to obviate the likelihood of multiple businesses facing financial fragility being pushed through the insolvency process.
Excessive insolvency filings would clog the National Company Law Tribunal (NCLT), and cause the erosion of enterprise capital as well as possible liquidation of viable businesses.
Professor Mark Roe at Harvard Law School, while speaking on the possibility of clogged bankruptcy courts, said that this could lead to a further stagnation of business, investments and hiring.