The Ministry of Law and Justice on 12th August 2021 has notified the Insolvency and Bankruptcy Code (Amendment) Act, 2021 which shall be deemed to have come into force from 4th April, 2021.
Through this amendment it has enabled Pre-packaged Insolvency Resolution process for MSMEs as follows:
An application for initiating pre-packaged insolvency resolution process may be made in respect of a corporate debtor classified as a micro, small or medium enterprise under sub-section (1) of section 7 of the Micro, Small and Medium Enterprises Development Act, 2006.
The corporate debtor shall obtain an approval from its financial creditors, not being its related parties, representing not less than sixty-six per cent. in value of the financial debt due to such creditors, for the filing of an application for initiating pre-packaged insolvency resolution process, in such form as may be specified: Corporate debtors eligible for pre-packaged insolvency resolution process. 27 of 2006.
Provided that where a corporate debtor does not have any financial creditors, not being its related parties, the approval under this sub-section shall be provided by such persons as may be specified
The corporate debtor shall file an application for initiating pre-packaged insolvency resolution process within a definite time period not exceeding ninety days and the process shall be completed within a period of one hundred and twenty days from the pre-packaged insolvency commencement date.
The corporate debtor shall, within two days of the pre-packaged insolvency commencement date, submit to the resolution professional the following information, updated as on that date, in such form and manner as may be specified, namely: a list of claims, along with details of the respective creditors, their security interests and guarantees, if any; and a preliminary information memorandum containing information relevant for formulating a resolution plan.
