Impact of COVID-19 on Insolvency and Bankruptcy Code:

Introduction:

It has almost been a year since the nation entered into a “Lockdown”, a complete closure of
all the activities except the healthcare and food sector. Everything came to a halt, business
cycles were disturbed, people lost their livelihood, Business houses went bankrupt and every
individual surviving through the pandemic was scared for his/her life. Survival through the
year was given more importance than anything else. However, what did not stop was the
spread of the Novel Coronavirus and it resulted in the lockdown being extended. The
disruption caused due to the extended lockdown was even bigger but now it was the new
normal. People accepted the change and moved on wearing masks and using sanitizers
because eventually bread is to be earned. Therefore, when a nation of 1.3 billion people was
locked down people were finding it difficult to earn their livelihood.
For the first couple of months several small and medium size companies were unable to carry
out their business activities and had to bear a huge loss. Such a situation might lead to
large-scale filing of Insolvency Proceedings against business entities who defaulted on
discharging their debts. In order to prevent such possibilities, the Government of India
quickly moved various ordinances immediately after imposing lockdown in the Country.
As the COVID-19 plunges down the economy, it is anticipated that there might be a huge
wave of Insolvency applications filed in the NCLT. This will eventually hamper the corporate
sector of India and thus urgent reforms were needed in the Insolvency and Bankruptcy Code
to safeguard Corporates affected by COVID-19. To respond to such issues the government
has taken certain precautionary measures like Moratorium on Bank loan repayment, Infusion
of funds in the Banking sector to provide funds to distressed firms. Increasing the threshold
limit of minimum default to file an application from 1 lakh to 1 crore to prevent micro and
small scale industries being punished in the pandemic.
This will eventually hamper the corporate sector of India and thus urgent reforms were
needed in the Insolvency and Bankruptcy Code to safeguard Corporates affected by
COVID-19.
Before moving to the reforms brought by the Government in the Insolvency and Bankruptcy
regime to help enterprises overcome this pandemic situation, it is important to understand the
objective and purpose of the Code. The objective of the Code is to enact laws pertaining to
the restructuring of the insolvent companies by passing appropriate resolution plans, Seek to
maximise the value of the assets, to promote entrepreneurship amongst the people and to
make the credit available to the corporates.
Analysing the objective of the Code, it is clear that this code was brought by the Government
to promote corporate growth in India by demotivating liquidation of companies. Liquidation
should always be the last option available to the stakeholders and they should seek to revive
the company in most cases. Keeping in mind the objective and the purpose of the code, the
Government of India has brought many reforms to protect, especially small and medium
enterprises. The government of India took various legal measures after several countries like
United Kingdom, Australia and U.S.A initiated solvency recourse

Objective:
To study the impact of COVID-19 pandemic on the working on Insolvency and Bankruptcy
Code and to study and analyse various reforms brought by the Government of India in order
to provide relaxations to the Corporation in such a stressed environment.

Research Methodology:
Secondary Research Methodology:
I have used:
Data available on the internet.
Government Agencies
Commercial Information Sources

Hypothesis:
1) Will the Relaxation and reforms brought by the Government help Corporations to
overcome this stressed situation?
2) Will Digital be the new normal?

Research and Discussion:

Before Coming to the impact of COVID-19 on Insolvency and Bankruptcy Code, we should
analyse, what is the impact of COVID-19 pandemic on different sectors of the Indian
Economy.
Though the COVID-19 Pandemic has haunted the economy of each and every country in the
world, almost all the sectors are severely affected because of nation-wide lockdown. But
amongst the list of affected industries, there are few sectors which are considered to be the
worst hit industries due to COVID-19 pandemic. These Sectors includes:
Hotel and Restaurants,
Automobile Sectors,
Entertainment Sector and
Airline Sector, etc.
The World Travel and Tourism Council estimates that there might be a loss of 100 million
jobs in Tourism sector all over the world. Not just India, but the whole world was under
serious Lockdown for a couple of months after COVID-19 was detected. This in-turn stopped
the working of the Aviation sector not just in India, but all around the globe. People were not
allowed to travel outside of their country or perhaps state in order to prevent the spread of
COVID-19 pandemic. According to the World Travel and Tourism Council, the Tourism
Sector contributes almost 10% of the total GDP of the world and is perhaps one of the most
important sectors for countries growth and development. Data shows that 63.4 million people
could possibly lose their job and there could be a loss of around 1,041 billion US Dollars in
Asia region alone1.
Even the Hospitality industry (which includes Hotels and Restaurants) has suffered alot due
to COVID-19 pandemic. Nakul Anand, the Chairman of Federation of Associations in
Indian Tourism and Hospitality, stated that, “The three quarter after the national lockdown
was imposed have been the worst quarters in the past decade of the hospitality industry”. The
Industry has suffered a loss upto Rs 15 Lakh Crore amid COVID-19 pandemic2.
In such a stressed situation it is pertinent to note that the government will have to pay special
attention to the Hospitality sector. The Tourism and Hospitality sector go hand in hand and
thus a wider strategy is required to tackle problems of both the industries simultaneously.
With the government giving permission to open hotels and restaurants with utmost precaution
the damage inflicted by the COVID-19 still calls for government reforms to ease the
hospitality and tourism business for small enterprises.

1
WTTC now estimates over 100 million jobs losses in the Travel & Tourism sector and alerts G20 countries to
the scale of the crisis, WORLD TRAVEL & TOURISM COUNCIL, (Feb. 10, 2021, 1:06 PM),
https://wttc.org/News-Article/WTTC-now-estimates-over-100-million-jobs-losses-in-the-Travel-&-Tourism-sect
or-and-alerts-G20-countries-to-the-scale-of-the-crisis.
2
Ajay Tyagi, For hospitality and tourism sector, 2021 is all about survival, recovery, LIVEMINT, (Feb.
10,2020, 3:21 PM),
https://www.livemint.com/industry/human-resource/for-hospitality-and-tourism-sector-2021-is-all-about-surviva
l-recovery-11608544204065.html.
With the advent of lockdown, there was practically no use of automobiles for a couple of
months after March 2020. The Federation of Automobile Dealers Association stated that
there might be 45% drop in footfalls to car showroom amid COVID-19 pandemic3.
Automobiles are one sector which requires careful planning by the government to help them
come out of this stress. This is so because those people who were saving and planning to
purchase a car in 2020 prior to march 2020 had probably spent their savings to meet the
expenses during complete lockdown. Despite the re-opening of business in the last quarter of
2020, it will still take ample time for the people to think of purchasing a new vehicle,
considering the fact that vehicles are a Liability and not Assets.
The above mentioned sectors are amongst the most affected sectors in India. Especially the
start-up who were planning to grow in Hotels, Restaurants and Automobiles are all at the
brink of getting shut. They are not able to raise enough funds to discharge the loans they have
taken from the banks or any other creditors. Hence there is a need to inculcate a strategic
reforms in the Insolvency and Bankruptcy Code which will pull-out small and medium
Industries from the pits of COVID-19.
The winding-up of various companies will eventually hamper the corporate growth of India
and thus calls for urgent reforms in the Insolvency and Bankruptcy Code to safeguard
Corporates affected by COVID-19.

1.1) Suspension of Insolvency Proceedings:

Two days after the National Lockdown was pronounced, the Ministry of Corporate Affairs
released a notification on 25th March 2020 suspending all the Insolvency Proceedings under
section 7, 9 and 10 of Insolvency and Bankruptcy Code for the first 6 months. Looking at the
current scenario, the government on 22nd December 2020 decided to extend the suspension
for next three months i.e. till 25th march 2021. This is a great step taken by the Government
of India to ensure that no corporation is affected by the COVID-19 pandemic.
Various markets such as fmcg, automobiles, clothing have observed a steep decline in their
consumer base due to the unforeseen pandemic. Here, it becomes difficult for small
companies to continue with operations in the same fashion as before. There was a need to
give some sort of relief to corporate debtors .The purpose behind the said regulations was to

3
Sumant Banerji, CoronaVirus Impact: 45% drop in footfalls to car showrooms in a week, syas FADA,
BUSINESS TODAY (Feb 10, 2021, 3:33 PM),
https://www.businesstoday.in/sectors/auto/coronavirus-impact-45-drop-in-footfalls-to-car-showrooms-in-a-week
-says-fada/story/398122.html.
facilitate and promote an environment to boost the confidence of various stakeholders
essentially the directors, partners and other executives to continue working in exceptional
market situation, without the fear of facing of any problems in case the company goes
insolvent.
Companies working on a small scale often face liquidity, cash flow, supply chain issues and
the pandemic has surely added to the burden. In such a situation the regulation passed by the
parliament has brought such companies at ease. This rationale will only hold true if the
market condition improves and the companies are able to increase the financial liquidity. The
companies will also be able to take advantage of Atmanirbhar Bharat Yojana.
The rationale behind suspension of Insolvency Proceedings is to protect firms which were
making decent profits from their enterprises. The very objective of the Insolvency and
Bankruptcy Code is to protect the enterprises in case they fail to discharge their default loans.
The Code seeks to minimise the chances of the enterprise getting liquidated. In COVID-19
pandemic all the enterprises who are severely affected due to lockdown will eventually face
the Insolvency Proceedings because of non-repayment of the loans. And with no business
operations being carried out in COVID-19 pandemic, the enterprises won’t have enough
funds and assets to structure the resolution plan in such a way as to rescue themselves from
winding-up. It was thus, a great step by the Government to suspend all the Insolvency
Proceeding during COVID-19, (it has to be noted that it does not safeguard those enterprises
which were facing insolvency proceedings prior to nation-wide lockdown). Looking at the
current market sentiments, the enterprises are bouncing back to normalcy. The market cycle
has again started moving and firms might have started earning pretty decent revenue. Thus
the firm could be in a position to pay off their debt till 25th March 2021. If the suspension
proceedings were not implemented immediately after the lockdown, many Financial
Creditors and Operation Creditors might have moved the Insolvency Application in NCLT
thereby putting great stress on the enterprises to liquidate. This step would have eventually
hampered the objective of the Insolvency and Bankruptcy Code.
Suspension of Insolvency proceedings will also give the corporation a chance to come up
with new ideas to cut down their expenditure to meet the expenses. Even Microsoft released a
statement stating that it was after COVID-19 pandemic we realised that it is possible for our
employees to work from home permanently4. For the small corporation this will in turn cut

4
Tom Warren, Microsoft is letting more employees work from home permanently, THE VERGE (Feb 12, 2021,
9:32 PM),
https://www.theverge.com/2020/10/9/21508964/microsoft-remote-work-from-home-covid-19-coronavirus.
down their expenses by not having to pay the additional cost like Paying office rent,
electricity, Transport fees etc. Given the situation, the pandemic will eventually push all the
enterprises to bring out reforms and innovative ideas to save their companies from this
nightmare.
The Reserve Bank of India taking cognizance of the Financial Conditions of had imposed
moratorium on 25th March 2020 for the initial period of 3 months. It was also extended till
August 2020 but subsequently RBI released that moratorium beyond a certain time won’t be
viable for the baking system. Imposing a moratorium for a couple of months after lockdown
was indeed a great step towards safeguarding the financial conditions of those borrowers
whose financial creditors were different banks and Non-banking financial companies. In my
opinion this could have greatly reduced the pressure on the companies to discharge their
liabilities. A company when in business operation has to maintain a cycle where it takes loans
and credit from the bank, NBFCs and personal finance, which create a liability and the
company seeks to grow/ carry out its business operation with the funds they raise. With the
advent of COVID-19, the business operation came at a sudden halt. No one expected such
sudden hindrance. This led to the disruption of the business cycle in the economy and thus it
was necessary for the RBI to protect micro and small finances from the disruption.
Looking at the current scenario, where firms have started to carry out their business
operations with utmost precautions it can be anticipated that the suspension of Insolvency
Application till 25th March 2021 will help the corporation to discharge their loans at least till
the first week of April. Thus the suspension of Insolvency Proceedings and a little help from
RBI on imposing a moratorium for a couple of months after lockdown might have saved
some enterprises.

1.2) Increasing the threshold Limit from 1 Lakh to 1 Crore:

As discussed above, how the COVID-19 pandemic has proved to be a nightmare for the
corporation (especially for small and medium enterprises). The Government of India relaxed
the threshold limit to file an application of Insolvency from 1 Lakh to 1 crore through the
powers conferred to them under section 4 of Insolvency and Bankruptcy Code. In a normal
economic state Rs 1 Lakh is a meagre amount for the corporations. It is possible for
companies to pay back the existing loans in a stable economic state. But the Covid-19
pandemic has haunted the corporations right from March 2020 when the National Lockdown
was imposed. Such a grave situation calls for strategic reforms in the Code to help revive the
companies. The Government of India on 24th March 2020 immediately released another
notification, thereby increasing the threshold limit to file Insolvency Proceedings from 1 lakh
to 1 crore. The increase in the Threshold limit has several advantages. First it will safeguard
small businesses, which are the most affected business entities, from Insolvency Proceedings.
Many small businesses who resumed their business operation from November will have a
decent amount of time to earn an adequate sum of money to stabilise their defaults.
Another rationale of increasing the threshold limit is to maintain stability in the market.
Every Creditor is also a Debtor to someone else. Thus someway or the other, the Financial
Creditor is dependent on the money lended to the Debtor. The Creditor is of the view that
he/she can lend loan with an interest to earn money and to pay off the debts. But with no
business operation working, the Corporate Debtor is unable to pay off the existing debt and
further the Financial Creditor might not be in a position to pay off his/her personal debt. Thus
the only remedy the Creditor will have is to move an application of Insolvency to the NCLT.
This will create a great burden on the NCLT to adjudicate the matter and also on the Financial
Creditor. The increase will also help the judiciary by reducing the burden of Insolvency
applications which was anticipated to be filed after the Lockdown.
Another way to reduce the burden on the judiciary is to establish more benches for NCLT and
if possible NCLAT5. This will seek to distribute the matters to different NCLT thereby
reducing the number of matters per bench/court/judge. It will also result in adjudicating the
matter smoothly and in time.
It will also restrict those Creditors who wish to file frivolous insolvency applications6 amid
such stressed economic systems.
The Insolvency and Bankruptcy Board of India (IBBI) by introducing regulation 47A & 40C
made it clear that the time period for which the Government has imposed Nation-wide
lockdown will not be taken into consideration for determining the time-limit given under any
regulation in Insolvency and Bankruptcy Code. This step is implemented by the Supreme
Court for all the other laws as well. The limitation period given under Limitation Act and
Civil Procedure and Criminal Procedure was also exempted till the lockdown has been
imposed. It will ensure that unnecessary defaults do not occur in the future. This move would
also ensure that the NCLT is not flooded with procedural applications seeking extensions and

5
Gargi Jain, COVID-19 Impact on IBC, TAXGURU (Feb 12, 10:10 PM),
https://taxguru.in/corporate-law/covid-19-impact-ibc.html.
6
Ashish Parwani & Gitika Makhija, India: IBC Amendments And Its Impact In The Wake Of Covid-19,
MONDAQ (Feb 12, 9:30 PM),
https://www.mondaq.com/india/operational-impacts-and-strategy/949132/ibc-amendments-and-its-impact-in-the
-wake-of-covid-19-#:~:text=The%20Union%20Finance%20Minister%20also,%2C%202016%20for%20six%20
(6).
or condoning delay in meeting time-lines. It is a major relief provided to corporates7. Hence,
it was an important step towards safeguarding the Indian Corporate Sector overall.

1.3) Pre-Pack Insolvency: A tool to reduce the burden on NCLT:

The term ‘Pre-pack’ means an informal restructuring plan agreed by the creditors and debtor
to revive the company before filing the insolvency application to the court for getting
approved. The Government of India established a committee which gave its report on the
implementation of Pre-pack insolvency amid COVID-19.
As we all know that the formal process of Insolvency Proceeding is time consuming and
often costly. The small and medium industries are the backbone of the Indian Manufacturing
Sector. Thus, safeguarding their interest should be the first priority of the Government.
Taking into consideration the current situation, there is a need for a mechanism which will
resolve the dispute between the Financial/Operational Creditor and Corporate Debtor. The
introduction of Pre-packaged insolvency was a great move to make haste to the Insolvency
Proceedings.
As stated above, the Insolvency is an ‘informal process’ of settling down the dispute outside
of the court. This will indirectly result in speedy resolution of a company without complying
to the lengthy proceedings involved in the formal process. Quickly passing a resolution plan
will also yield a maximum value for the assets. The value of assets decreases with time and
thus it is important for the Financial/Operational Creditor to pass a resolution plan as soon as
possible. This step will in turn maximise the chances of the company being revived to normal
stage and the objective of Insolvency and Bankruptcy Code will be protected.
Had this been the other way around, where no informal options were available to the
Creditors and Debtors, it would have been difficult for the creditors to revive the company
thus pushing the company to undergo Liquidation.
Liquidation process should always be the last resort as it puts burdens on the Creditors and
Debtors and also on the Tribunal who is responsible to adjudicate the matter. Thus liquidation
will have an adverse effect on the Indian Economic Growth amid COVID-19 forcing
companies to wind -up.

Proper implementation of Pre-Packaged Insolvency will not only help the small and medium
enterprises, who are perhaps the most affected sector due to COVID-19, to rejuvenate and

7
Gargi Jain, COVID-19 Impact on IBC, TAXGURU (Feb 12, 10:10 PM),
https://taxguru.in/corporate-law/covid-19-impact-ibc.html.
possibly grow after things get down to normal but it will also provide Creditors and Debtors
to settle most of the Insolvency Proceedings outside of the court. This will help release the
burden on the shoulders on the Tribunals. The Chairman of Insolvency and Bankruptcy board
while giving an interview to the BL research bureau8 said that, while the business operations
are getting back on track it is anticipated that the Creditors (Financial and Operational) along
with the Corporate Debtor will sit together to decide how to structure the business so as to
meet the default. The Chairman while discussing the COVID-19 effects on IBC also stated
that Insolvency and Bankruptcy Code does not seek to recover money from the Debtor like
other acts and regulations. Apart from IBC, the creditor is at liberty to go for civil suit under
The Securitisation and Reconstruction of Financial Assets and Enforcement of Securities
Interest Act [SARFAESI Act] or to the Debt Recovery Tribunal. It will also tackle the
scarcities of Interim Insolvency Professionals as no formal options have been opted in
Pre-Pack.

1.4) Amendment to Insolvency and Bankruptcy Board of India (Insolvency Resolution

Process for Corporate Persons) (Third Amendment) Regulations, 2020 [Section 12(3)]
Section 12(3) of the Insolvency and Bankruptcy Code, 2016 states that the total time taken to
complete the whole Corporate Insolvency Resolution Proceedings shall be 330 days. But with
the unforeseen closure of the nation, the IBBI provided relief to the functioning of the
Insolvency proceedings. On the 29th of march the IBBI amended the regulations governing
the IBC, 2016 and provided that the period from which the Nationwide Lockdown was
implemented will be disregarded for the purpose of calculation of the Preceding period
(which in normal circumstances was fixed at a maximum of 330 days).
This step will have few advantages of its own. First, because the period of Lockdown has
been disregarded, the Financial/Operation Creditor and Corporate Debtor will have ample
amount of time to decide the best suited resolution plan for the company. This will help the
company to maximise its chances of being revived with ease and safeguard itself from
distressed assets. It will also give the board members and the owners to think of innovative
ideas to restructure their entire business so as to meet the day to day expenses. For example:
The company can now think whether all the employees require office space or not. By
making those employees work from home whose physical presence as such is not required in
the office will cut down the rent expenses.

8
Radhika Merwin, Covid impact will not derail IBC, INSOLVENCY AND BANKRUPTCY BOARD OF
INDIA (Feb 12, 10:25 PM), https://ibbi.gov.in/uploads/resources/d710f5e800ca901b7ce129e861316fce.pdf.
It was also important to disregard such a time period because many small and medium
enterprises were at the verge of dying. Had the time period was not disregarded it would have
severely hampered the small industries, pushing them to liquidate.

1.5) Insolvency and Bankruptcy Board of India (Liquidation Process) (Second

Amendment) Regulations, 2020:
Applying the same logic of Insolvency and Bankruptcy Board of India (Insolvency
Resolution Process for Corporate Persons) (Third Amendment) Regulations, 2020
The government of India under Section 196 read with 240 of the Insolvency and Bankruptcy
Code, 2016 (which confers power to the government) amended the Insolvency and
Bankruptcy (Liquidation Process) Regulations, 2020. The Regulation 47A titled “Exclusion
of period of Lockdown” stated that “The time period for which the government has imposed
a lockdown will not be taken into consideration for determining the time-line for any
proceedings which comes under the purview of the said code and regulation.
In my opinion, the said regulation was brought with the same logic as it is applied to the
Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate
Persons) (Third Amendment) Regulations, 2020 i.e to restrict the number of application for
extension and condonation of delay.

2) Will Digital be the new normal?:

The Covid-19 pandemic has pushed everyone of us to switch to the Online mode of
communication and working. It has opened gates for a Virtual world which we were not used
to prior to 2020. Even the Indian Judicial System is now moving more and more towards
Virtual Court hearing. The Gujarat High Court was the first court to live-stream its court
proceedings virtually9. The initiative got much appreciation from people of the legal
fraternity which indicates that Courts can substitute Physical Hearing of cases with Virtual
Hearing with ease. The supreme court while hearing a plea for resuming physical hearing
stated that Virtual Hearing is as good as Physical Hearing indicating the importance of Virtual

9
Mahesh Langa, Gujarat High Court the first to live stream proceedings, THE HINDU (Feb 11, 2021, 3:41
PM),
https://www.thehindu.com/news/national/other-states/gujarat-high-court-begins-live-streaming-of-proceedings-o
n-trial-basis/article32944091.ece.
Hearing. The Supreme court also heard 7144 cases in merely 57 days after imposition of
National Lockdown in the country10.
The above mentioned facts indicate that the Digital world could be the new normal. It’s been
more than 10 months since the Lockdown was imposed because of which more and more
people in the legal fraternity are getting accustomed to Virtual Hearing.
Looking at how smoothly the Gujarat High Court and Supreme Court are carrying out its
daily proceedings it can be ascertained that in the next few years Virtual hearing could be the
next normal even for the Advocates, CA’s and CS’s who appear in NCLT and NCLAT.
Though it will take some time for the people to get accustomed with the Virtual Process, once
they get used to it, it will be easier for them to appear for proceedings. This will also save
some additional cost which is incurred every month on Judicial Infrastructure.
The Supreme Court is also considering adopting a hybrid method where Advocates can
appear in Physical and/or Virtual Court Proceedings. In order to adopt a ‘Hybrid Method’ the
Supreme Court will have to come up with a proper plan as to how to implement it. If
implemented properly, it will further reduce the rush and the crowd of the court premises.

2.1) Is COVID-19 pandemic a boon for the NCLT structure?

The repercussions of COVID-19 pandemic on the Indian Corporate Sector have already been
discussed above. But every coin has two sides to it. The COVID-19 pandemic has opened
gates for a completely new virtual world. This will save a lot of valuable time for Advocates,
Charter Accountants and Company Secretaries, as they don't have to go from one court to
another or from their office to courts multiple times. With the increase in use of technology in
the 21st Century, COVID-19 has made us realise one thing, that is, it is possible even for the
courts to work virtually. With the proper implementation of digital courtrooms, one can bring
small-small reforms, which if done at a large scale might make a difference. Advocates can
directly appear for minor proceedings virtually thereby reducing the usage of pages. If this
system is applied to the entire judicial system of India, it has the capability to make a huge
difference. It will serve as a helping hand towards conservation of nature. Reducing the usage
of paper will in-turn reduce the chopping down of trees every year.
The former Central Information Commissioner, Shaliesh Gandhi in a letter to Honourable
Chief Justice of India stated that, with the implementation of Virtual Hearing in all the courts,

10
Supreme Court Heard 7144 cases in 57 days Via Virtual Hearing During Lockdown, LIVELAW (Feb 11,
2021, 7:53 PM),
https://www.livelaw.in/top-stories/supreme-court-heard-7144-cases-in-57-days-via-virtual-hearing-during-lockd
own-158627.
will reduce the paperwork drastically. According to their estimates this step would lead to
saving of 6000 trees per year and Rs 6000 crores worth of paper. He also stated that
implementing virtual court hearings will serve better rule of law in the near future11.
One of the advantages of Virtual hearing is that it will tackle the on-going debate of ‘not
having access to court proceedings is a violation of Fundamental Rights’. Taking the example
of Gujarat High Court, which live-streamed all its proceedings on their official youtube
channel is considered to be one of the biggest successes in the Judicial System of this
country. All the people were at liberty to witness the live proceedings of a High Court
through youtube. If such reform is implemented in every court, it will ensure transparency
and will give a chance to students to grab as much knowledge as they could through the
proceedings.
Another major change that can be implemented in the Insolvency regime is making the
meetings of Committees of Creditors online. Prior to 2020, when meetings of CoC were
usually held physically, no one had probably thought of a virtual meeting of CoC to pass a
resolution plan. The said structure will have certain good implications. One can adopt a
hybrid system for CoC meetings, where those who are able to come for the meeting
physically can be present and others might go with the virtual mode to attend the meeting.
This will make the Insolvency Proceeding even more smoothly as it will seek to have
maximum participation of the stakeholders.
Another most important implication of the said reform is putting hold on the abuse of power
carried by the Resolution Professional. The proceedings to pass a resolution plan will be
transparent. Resolution Professional can’t interfere with the proceedings as the reform seeks
to achieve maximum participation from the shareholders. This will make the whole process
of Insolvency Proceedings genuine, less time consuming and cost saving (from the
perspective of the stakeholders).

Conclusion:
Having analysed each and every parameter and the changes brought in by the government as
a result of COVID-19 pandemic in the Insolvency Proceedings. It is to be noted that all the
steps which are mentioned above were taken to safeguard the interest of both Corporate
Debtor and Financial and Operational Creditor. While the GDP of the country was as low as

11
Sparsh Upadhyay, “If Courts Adopt Virtual Court System, It may lead to a better rule of law”: Former CIC
Shaliesh Gandhi Writes to Chief Justice of India (Feb 11, 2021, 5:00 PM),
https://www.livelaw.in/news-updates/if-courts-adopt-virtual-court-system-it-may-lead-to-a-better-rule-of-law-fo
rmer-cic-shailesh-gandhi-writes-to-chief-justice-of-india-168525.
-7.5% amid COVID-19 pandemic (In July-September quarter)12, we saw a rapid fall in the
businesses. The lockdown forced the economy of the country to move towards recessions.
But because of the few positive steps taken by the government most of the enterprises were
able to survive the lockdown. Coming to the current market sentiments, the effect of
COVID-19 pandemic is getting reduced day by day and people are moving back to the stage
of normlancy. Businesses have started working as they were prior to COVID-19 pandemic
and it is expected that slowly and steadily the Indian Economy will be on track very soon.
But at the face of it, the Small and Medium Industries are considered to be the backbone of
the Indian Economy. SMEs are the most affected industries of all, irrespective of the sector
they belong to and hence special attention is required to be paid by the government towards
them. In my opinion the government shall provide some additional relaxations to the MSMEs
or they should bump-up the value of every relaxation provided for all the enterprises for
Small enterprises.
No doubt, COVID-19 has been detrimental to each and every aspect of our life, but on the
other hand, it has made us realise the importance of the virtual world. Even the Courts are
now thinking to adopt a hybrid method to carry out its proceedings.
In the end, the Government of India through its immediate passing of amendments and
reforms made the Debtors and Creditor survive the strict lockdown.

12
India’s GDP fell by 7.5% in July-September, economy in technical recession for first time ever, SCROLL (Feb
13, 2021, 11:21 PM),
https://scroll.in/latest/979651/indias-gdp-fell-by-7-5-in-july-october-quarter-economy-hits-technical-recession-fi
rst-time-ever.