Ms. Anshuman Shreya, Chanakya National Law University
ABSTRACT
The object of insolvency laws across the world is to give protection to the troubled debtor from going into a tailspin and provide him some breathing space to revive his enterprise by protecting it from the claims of its creditors and other stakeholders. As soon as a Moratorium is placed, all proceedings against the Corporate Debtor for recovery of any debt or property come to a standstill for the duration of the moratorium. This provides the debtor the necessary protection from all claims, existing as well as future, for the duration of the moratorium and let the Corporate Debtor focus all his attention towards the revival of the core business. Any distraction in terms of claims and law suits and taken away for a limited period with the sole intent of helping the enterprise stand back on its feet which is not only in the interest of the creditors, promoters and employees but also for the well being of the entire economic system. Moratorium extends to all suits and proceedings against the corporate debtor in any court of law and includes execution and arbitration proceedings. It also applies to any proceedings initiated by banks under the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act (SARFAESI) as well as any action to evict the corporate debtor from a property. However, the Moratorium only extends to the assets of the Corporate Debtor against whom the insolvency proceedings are initiated and not to the proceedings against its directors and guarantors. The paper discusses the concept of moratorium in relation to the banking sector.
Keywords: Moratorium, Bank, IBC, SARFAESI, Corporate debtor, RBI, banking companies, insolvency, economy, banking law, Banking Regulation Amendment Ordinance 2020, amalgamation
