The governments move to amend the insolvency law to allow pre-packaged insolvency resolution plans for micro, small and medium enterprises (MSME) with defaults of not more than 1 crore is welcome. The Insolvency and Bankruptcy Code (Amendment) Bill, 2021, that seeks to replace an Ordinance, will enable the creditor and the debtor to informally work on a rehabilitation plan (instead of financial bidding) without a bankruptcy courts involvement. It will reduce the courts load and, more importantly, provide MSMEs an opening to rebuild themselves rather than be liquidated.
Pre-packs underscore the core purpose of the code: speedy redeployment of assets trapped in failing companies, rather than credit recovery. Global experience shows that pre…
Read the full article at: https://economictimes.indiatimes.com/opinion/et-editorial/insolvency-pre-packs-good-for-small-firms/articleshow/84801682.cms
