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ARTICLE · 23 MAY 2020

Can MSMED Act Be An Alternative To Proceedings Under IBC For Start-Ups?

King, Stubb & Kasiva
King, Stubb & Kasiva
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King, Stubb & Kasiva

King, Stubb & Kasiva

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One of the most gabbed and appalling legislation in recent times has been the development of the Insolvency & Bankruptcy Code, 2016 ("IBC") as a recovery mechanism.

IndiaInsolvency/Bankruptcy/Re-Structuring
Raj Dev Singh
Raj Dev Singh
Pathik Choudhury
Pathik Choudhury
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One of the most gabbed and appalling legislation in recent times has been the development of the Insolvency & Bankruptcy Code, 2016 ("IBC") as a recovery mechanism. However, the recent announcement by the Finance Minister("FM"), Ms. Nirmala Sitharaman, has brought shock to the businesses in a gambit to give relaxation to the defaulting companies due to the stress of COVID-19. The FM has announced exclusion starting from elimination of COVID-19 debt from the definition of default to non-initiation of proceedings for one year under IBC. There is an amendment to enhance the threshold limit to trigger insolvency from 1 lakh to 1 crore in a drive to save the economy. In the light of such announcements, The Micro, Small and Medium Enterprises Development Act, 2006 ("MSMED Act") aims at facilitating the promotion, development and recovery mechanisms for micro, small and medium enterprises("MSME").

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