pandemic Government

Insolvency: Do not kick this can further along

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Insolvency and Bankruptcy Code (IBC) expires, uncertainty looms over what the government plans to do next. Though no clear stance has been articulated yet, the finance ministry is reportedly leaning towards keeping the code suspended for three more months, so that insolvencies amid the extraordinary circumstances created by the covid pandemic can be averted for a little longer.

This, however, is not necessarily the best course to take. By doing so, we would simply be kicking the can of bankruptcies further down the road, to be dealt with later.

The risks of such a move for banks are also significant. They already have to worry about which way our apex court may rule on interest payments by availers of the central bank’s loan moratorium.

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