A New Way Towards Insolvency Process
- IJLLR Journal
- Jan 9, 2024
- 1 min read
Paridhi Agrawal, Amity Law School, Noida
ABSTRACT
The pre-packaged insolvency resolution Process also known as pre-packaged bankruptcy plan is a new and innovative way included in Insolvency and Bankruptcy Code 2016 [IBC 2016] by the Presidents promulgation of IBC[Amendment]Ordinance,2021 passed on 4th April 2021. The ordinance was aimed to provide effective and smooth resolution from stress to Micro, Small and medium enterprises [MSME’s] which contribute significantly to India’s Gross Domestic product and the Overall Indian Economy. Many MSME’s have experienced financial difficulties as a result of COVID-19 pandemic's effects on their commercial operations. Because of the distinctive character of their companies and their less complex corporate structures, new approaches were considered necessary to resolve their stress.
Therefore, it was considered necessary to amend the 2016 code and add in it a new chapter consisting an effective alternative insolvency resolution process for MSMEs which ensures speedier, affordable, and value-maximizing results for all parties involved in a way that minimizes disruption to their businesses’ ongoing operations and protects jobs.
Pre-Packaged Insolvency and Resolution Process [PPIRP] is used to resolve instances where the default made by the Corporate Debtor [CD] is between 10 lacks and 1 crore. If the default exceeds 1 crore, the Corporate Insolvency Resolution Process [CIRP] is used, with the function of the NCLT at the forefront.
In the upcoming Paragraphs the Author will briefly discuss, who are eligible to relieve their stress by using PPIRP.
