Q. Consider the following statements regarding Pre-Pack Insolvency Resolution Process (PIRP):
1. It involves a public-bidding process to ensure fairness of proceedings.
2. Debtors remain in control of their distressed firm during PIRP.
3. PIRP allows for a Swiss challenge to the resolution plan submitted by a corporate debtor.
Which of the above statements is/are correct?

[A] 1 only

[B] 2 and 3 only

[C] 3 only

[D] 1, 2 and 3

Answer: B
Notes:
  • Statement 1 is incorrectA pre-pack is an agreement for the resolution of the debt of a distressed company through an agreement between secured creditors and investors, instead of a public bidding process. 
  • Statement 2 is correct: Unlike in the case of the corporate insolvency resolution process (CIRP), debtors remain in control of their distressed firm during the Pre-Pack Resolution Process (PIRP). 
  • Statement 3 is correct: The pre-pack insolvency resolution process (PIRP) also allows for a Swiss challenge to the resolution plan submitted by a CD, in case operational creditors are not paid 100% of their outstanding dues. 

Source: Indian Express 

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