Understanding Moratorium Under The Insolvency And Bankruptcy Code, 2016 And Its Effect On Arbitration Proceedings

Introduction to Moratorium

The Insolvency and Bankruptcy Code, 2016 (hereinafter referred to as "IBC") was enacted with a view to address the shortcomings in the insolvency laws and change the process of insolvency resolution in India. The provisions of the IBC are applicable to all corporate persons, partnership firms and individuals in case of insolvency, liquidation, voluntary liquidation or bankruptcy. Upon occurrence of a default, the resolution process under the IBC may be initiated by the debtor or a creditor. The Corporate Insolvency Resolution Process (hereinafter referred to as "CIRP") may be initiated by making an application to the National Companies Law Tribunal (hereinafter referred to as "NCLT"). Once an application is made to the NCLT, the CIRP is to be completed within a period of 180 days. Upon admission of the application by the NCLT, a moratorium under Section 14 of the IBC is declared by the NCLT for prohibiting all kinds of legal proceedings