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An ordinance was promulgated to amend the Insolvency and Bankruptcy Code (IBC) on April 4, according to a notification The government has amended the insolvency law to provide for a pre-packaged resolution process for micro, small and medium enterprises.
An ordinance was promulgated to amend the Insolvency and Bankruptcy Code (IBC) on April 4, according to a notification.
The latest move comes less than two weeks after the suspension of certain IBC provisions ended. The suspension wherein fresh insolvency proceedings were not allowed for a year starting from March 25, 2020 was implemented amid the coronavirus pandemic disrupting economic activities.
As per the ordinance, it is considered necessary to urgently address the specific requirements of Micro, Small and Medium Enterprises (MSMEs) relating to the resolution of their insolvency, due to the unique nature of their businesses and simpler corporate structures.
Pre-pack insolvency for MSMEs now a reality
April 05, 2021
Centre issues Ordinance; debt default threshold to be notified The Centre has taken the Ordinance route to introduce pre-packaged insolvency resolution process (pre-pack) for companies classified as micro, small and medium enterprises (MSMEs).
India has 6-7 lakh companies that are classified as MSMEs, which could potentially benefit from the newly-introduced pre-packaged insolvency framework.
A pre-packaged insolvency in the Indian framework context is an arrangement where the resolution of a company’s business is negotiated with a buyer before the appointment of an insolvency professional. It is a blend of informal and formal mechanisms, with the informal process stretching up to NCLT admission, followed by an existing NCLT supervised process for resolution, as specified under the Insolvency and Bankruptcy Code (IBC).
Govt amends IBC, introduces pre-packaged resolution process for MSMEs
The amendment allows the Centre to notify the minimum amount of default value, not more than Rs 1 crore, for pre-packaged insolvency resolution process.
BusinessToday.In | April 5, 2021 | Updated 14:59 IST
The government had last year suspended fresh insolvency proceedings for six months from March 25. The suspension was extended twice by three months.
The government on Sunday amended the Insolvency and Bankruptcy Code, 2016 by promulgating an Ordinance to provide pre-packaged resolution for micro, small and medium enterprises (MSMEs).
The amendment allows the Centre to notify the minimum amount of default value, not more than Rs 1 crore, for pre-packaged insolvency resolution process.
Synopsis
A pre-packaged resolution essentially translates to a company preparing a restructuring plan with its creditors before initiating insolvency proceedings. This helps to cut down the time and costs in the overall process.
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In June 2020, the government promulgated an ordinance that suspended initiation of new insolvency proceedings for defaults.
The Central Government has promulgated Insolvency and Bankruptcy Code (Amendment) Ordinance 2021 to allow pre-packaged insolvency process for MSMEs.
The Ordinance, in essence, has amended the Insolvency and Bankruptcy Code 2016 and allows the Central Government to notify such pre packaged process for defaults of not more than Rs 1 crore.
The government had been looking to offer a pre-packaged resolution framework for stressed companies under the IBC. A pre-packaged resolution essentially translates to a company preparing a restructuring plan with its creditors before initiating insolvency proceedings. This helps to cut do
Centre brings ordinance to introduce pre-packaged debt resolution process for MSMEs
The suspension wherein fresh insolvency proceedings were not allowed for a year starting from March 25, 2020 was implemented amid the coronavirus pandemic disrupting economic activities
PTI | April 5, 2021 | Updated 14:48 IST
The government has amended the insolvency law to provide for a pre-packaged resolution process for micro, small and medium enterprises. An ordinance was promulgated to amend the Insolvency and Bankruptcy Code (IBC) on April 4, according to a notification.
The latest move comes less than two weeks after the suspension of certain IBC provisions ended. The suspension wherein fresh insolvency proceedings were not allowed for a year starting from March 25, 2020 was implemented amid the coronavirus pandemic disrupting economic activities.