President Promulgates IBC Amendment Ordinance To Allow Pre-Packaged Insolvency Process For MSMEs
The Central Government has promulgated Insolvency and Bankruptcy Code(Amendment) Ordinance 2021 to allow pre-packaged insolvency resolution process for corporate debtors classified as micro, small or medium enterprises under the Micro, Small and Medium Enterprises Development Act, 2006. The Ordinance amends the Insolvency and Bankruptcy Code 2016 to allow the Central Government to notify such pre-packaged process for defaults up to Rupees One Crores. It may be noted that the Centre had suspended the initiation of fresh insolvency process on March 24 last year in the wake of the COVID-19 pandemic. This suspension, which was extended from time to time, ended on March 24 this year. In this backdrop, this Ordinance has been brought to allow pre-packaged insolvency process saying that it will ensure “quicker, cost-effective and value maximising outcomes for all the stakeholders, in a manner which is least disruptive to the continuity of their businesses and which preserves jobs”. The Centre said that it felt an urgent need for introducing a special scheme for MSMEs “due to the unique nature of their businesses and simpler corporate structures”.