Blanket Protection Under India’s Covid-19 Insolvency Ordinance: An Attempt to Restore ‘The Defaulter’s Paradise’?

The Covid-induced amendments in the Indian insolvency code were introduced in the light of the nationwide lockdown crippling the financial capacity of companies. The Executive deemed it fit to provide blanket protection to companies from initiation of insolvency proceedings, irrespective of whether the default is or is not ‘covid-induced’, to protect otherwise healthy companies from undergoing insolvency. However, the net of protection is too wide as compared to the goal to be achieved. A more prudent route would have been to exclude only those defaults from the code having proximate nexus with Covid-19, a lesson that India needs to learn from other jurisdictions.