Unemployment threatens to bankrupt families due to COVID-19 Lockdown

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As COVID-19 affects the country’s economy, companies are bracing for the impact it would have on bankruptcies both ongoing.
Some words given by Anshul Jain, partner, PwC India – “There is an impact on bankruptcy proceedings. Acquirers don’t want to evaluate the assets in these uncertain times. Many acquirers are also facing liquidity crunch due to impact of stock prices as well as business lockdowns in many states. This will push back many deadlines for ongoing corporate insolvencies”.

The Govt is drawing up a relief package for industry with steps such as relaxation for bankrupt families, thus allowing companies to delay the repayment of loans, and tax holidays for the worst hit sectors like aviation and hospitality, but it might not be enough to stop more bankruptcies from getting filed.

COVID-19

Finance Minister Nirmala Sitharaman’s announced on Tuesday that after monitoring the situation the govt. might consider suspending the provision for triggering insolvencies for a period of 6 months of the Insolvency and Bankruptcy Code could bring a much needed breather for companies. As Sitharaman said – “If the situation continues beyond April we may consider this…so companies so also debt taken by families can be stopped from being forced into insolvency proceedings for such causes of default”.

As by the study of the whole situation it is noted that – “A simultaneous demand and supply shock to the economy will have implications for the banking sector. The demand side shock is expected to lead to an output loss of 1.2 per cent in banking and insurance combined”.
“Extension has to be given to the companies and bankrupts to be declared NPAs. We have to give time to society to settle down,” said Soumya Kanti Ghosh, chief economic advisor, State Bank of India. However industry experts said many would try to take advantages of the situation and blame the delay or non-delivery of projects on the COVID-19 pandemic situation.

 

Also read:- The Newspaper industry has lost ₹4,500Crore and it may loose ₹15,000Crore more without Govt aid

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