Introduction

The Universal spread of the coronavirus is not only generating dramatic consequences from a social perspective but it is also heavily affecting the global economy. Consequently, governments, budgetary controllers and universal associations are reacting to the coronavirus with a bundle of lawful, monetary and money related measures. Among the legal measures included in these packages, many countries, including Australia, Germany, Spain, India, Singapore, Colombia, Portugal, Czech Republic, Russia, New Zealand, the United Kingdom, United States and India have proposed or implemented temporary changes to their insolvency frameworks.
Insolvency law provides a variety of mechanisms to avoid the destruction of value generated in a situation of financial distress. When debtors are unable to pay debts, creditors become entitled to enforce their claims and ultimately seize the debtor’s assets.

The existence of a situation of insolvency may incentivize key employees to abandon the firm. Similarly, suppliers and lenders might decide to terminate their business relations with the debtor of they know that they might face the risks of having their claims unpaid. Therefore, as these circumstances can also destroy value, insolvency law helps minimize these costs by providing various regulatory responses.
Debtors facing financial trouble may have incentives to engage in a series of opportunistic behaviours that can destroy or opportunistically transfer value from the shareholders to the creditors. These opportunistic behaviours may include the transfer of assets to related party, as well as borrowing money in an irresponsible manner or even investing in risky projects as a last attempt to rescue the firm. In order to solve these problems, insolvency law provides several mechanisms, including avoidance actions and, in some jurisdictions, special duties and liabilities for directors of financially distressed firms.
Insolvency law provides some powerful tools to facilitate a debt restructuring. Hence, insolvency law can preserve value by allowing economically viable debtors to stay in business by emerging from bankruptcy with a new capital structure. This goal is achieved through several mechanisms. Insolvency law provides an adequate forum for negotiations. Insolvency law provides several tools that can help facilitate the renegotiation of the debtor’s financial commitments. These tools include the possibility that a majority (or qualified majority) of creditors may impose a decision on dissenting minority creditors and, in some jurisdictions, even the possibility that a reorganization plan can be imposed on dissenting classes of creditors.

However, the bankruptcy system still has some limitations. Firstly, the use of insolvency proceedings can be particularly costly for many small and medium size enterprises. Secondly, even if insolvency law allows financially distressed debtors to emerge from bankruptcy with a new capital structure, the debtor might still need some liquidity to initiate and manage the process. Thirdly, the bankruptcy system does not have the capacity and resources needed to deal with all the companies facing financial trouble as a result of the coronavirus. Thus, it seems that the bankruptcy system is not always optimal. And even if it were, the design of insolvency law might need some adjustments in times of COVID-19.

Discussion

Insolvency Law Response to COVID-19 in India

The courts in India with keeping in mind the outgrowing number of covid-19 cases, most courts including the National Company Law tribunal (NCLT) and the National Company Law Appellate Tribunal (NCLAT) decided to adjourn all the matters except the ones with utmost urgency. Lockdown had been imposed in many countries around the world the Company law tribunals which handles cases pertaining to the company Laws and the Insolvency and bankruptcy code were also shut down for safety reasons.
Supreme court while responding to the pandemic , it passed a suo moto order extending the limitation period for all the matters which left midway in the courts from March 15 , 2020. This was a needed relief for litigants for whom limitation period was about to expire during the shut-down period.
The emergency brought about by COVID-19 has offered ascend to much conversation on the Insolvency law reaction to it. Research organizations and specialists have considered changes that might be required to bankruptcy laws to manage the difficulties presented by the pandemic. Suspending the obligation of the executives to petition for bankruptcy, giving liquidity measures to upset organizations, and impermanent security to organizations appear to be the need of great importance.
The Indian Government on Tuesday raised the limit of default for documenting of an indebtedness request under the Insolvency and Bankruptcy Code, 2016 ("IBC") from Rs 1 Lakh to Rs 1 Crore. Section 4 of the IBC indicates Rs 1 Lakh as the base default sum premise which a request under the IBC might be recorded. This section likewise gives the Government of India the capacity to build this limit add up to any higher sum up to Rs 1 crore. The Central Government has practiced this force vide its warning dated March 24, 2020 and along these lines, petitions under the IBC can't be documented in regard of installment defaults beneath Rs 1 crore. This is a good move and will help medium and little ventures who have been hit the hardest by COVID-19. Having said this, the notice doesn't determine that the expanded edge is for defaults happening during the progressing lockdown period and subsequently, from the date of warning, IBC procedures can't be started for situations where the default sum is not as much as Rs 1 crore regardless of the date of default (the constraint time frame for IBC applications is three years from the date of default.
India has also considered suspending Sections 7 (right of a financial creditor to file an application under IBC), 9 (right of an operational creditor to file an application under IBC) and 10 (right of the company to file an application under IBC) for the time being.

Insolvency Law Response to COVID-19 Globally

A number of Countries in Australia and Europe have additionally reacted quickly to the difficulties presented by the COVID-19 pandemic to different members under the appropriate bankruptcy law system.
Australia, Spain and Switzerland have briefly suspended wiped out insolvent trading norms For example the Directors can proceed with the matter of the organization in spite of its income/obligation circumstance because of effect of COVID-19. Germany has proposed comparative relaxations which are required to be set up presently. In any case, almost certainly, proceeding with the business and bringing about further obligation without a cautious intend to restore the business once the limitations stop won't ensure the Directors.
Spain for a  short period of time has suspended creditors’ rights to file petition for insolvency. Australia has not so much suspended the creditors’ rights yet has expanded the limit for legal interest from Australian dollars 2,000 to Australian dollars 20,000 and has expanded an opportunity to consent to such a legal interest from 21 days to a half year.

Conclusion

The universal spread of the coronavirus isn't just creating sensational results from a social viewpoint yet it is additionally intensely influencing the worldwide economy. Therefore, governments, budgetary controllers and universal associations are reacting to the coronavirus with a bundle of legitimate, monetary and money related measures. Among the legitimate estimates remembered for these bundles, numerous nations, including Australia, Germany, Spain, India, Singapore, Colombia, Portugal, Russia, Czech Republic, Luxembourg, Russia, New Zealand, the United Kingdom, and the United States