IBC: Retrospective Application Of Revised Threshold- An Alternate Perspective

1. INTRODUCTION

1.1 In an apparent bid to avoid large-scale insolvencies, especially against the MSMEs, as a result of the financial stress caused by Covid-19 pandemic, the Central Government had, vide notification bearing no. SO 1205(E) dated March 24, 2020 ("Notification"), increased the threshold of the minimum amount of default for the purpose of maintainability of an application for initiation of corporate insolvency resolution process ("CIRP") under Insolvency and Bankruptcy Code, 2016 ("IBC"), from a sum of Rs. 1,00,000 (Rupees One lakh only) to Rs. 1,00,00,000 (Rupees One Crore only).

1.2 The notification, which does not indicate any specific date from when the revised threshold is proposed to be effective, has created flutters amongst the industry and the legal community as to the potential impact of such revision on the pending proceedings initiated under the IBC, where the amount of default is lesser than the revised threshold. This has resulted in