The Insolvency Bankruptcy Board of India (IBBI) has done a very microscopic keyhole surgery under the Insolvency and Bankruptcy Code (IBC) in the wake of the Covid-19 crisis with no suspension or complete ban, M.S. Sahoo, chairman IBBI said.

Sahoo noted that the traditional model will not work at a time when the economy is in an uncertain terrain due to the pandemic with several companies being under stress. “There is a possibility that a company which never defaulted earlier defaults during Covid on account of some fundamental reason and not because of the pandemic, there could be such a rare case but if we get into such things as to which one defaulted on account of Covid and which one for some other reason then we will simply lose years fighting legal battles, so let such rare case have the benefit but avoid disputes and move on,” said the IBBI chief.

“What was required was to have a well-calibrated middle path and suspend some of the elements,” said Sahoo said addressing the delegates in a e-summit on IBC hosted by industry body Assocham.

Sahoo added that companies which are experiencing stress for the first time due to the pandemic and the subsequent lockdown will be prevented from being forced into insolvency proceedings.

“During these unusual times protecting lives is most significant for us and this in-turn requires us to protect livelihoods and save lives of the companies that are the engines of growth, hope of prosperity, provide goods and services, employment and have an organisational capital over and above their liquidation,” Sahoo said.

S.C. Garg, former finance secretary, Ministry of Finance, is a special address said that the IBC was the most effective instrument available to banks for recovering their defaulted loans to the best extent possible. “Discretion to use IBC or restructure loans under RBI scheme or through any other legitimate way should be that of the banks,” he said..