{"id":100785,"date":"2021-04-09T17:36:07","date_gmt":"2021-04-09T12:06:07","guid":{"rendered":"https:\/\/blog.forumias.com\/?p=100785"},"modified":"2021-04-09T19:56:42","modified_gmt":"2021-04-09T14:26:42","slug":"pre-pack-insolvency-resolution","status":"publish","type":"post","link":"https:\/\/forumias.com\/blog\/pre-pack-insolvency-resolution\/","title":{"rendered":"IBC Amendment Ordinance 2021 Allows &#8220;Pre-Pack Insolvency Resolution&#8221;"},"content":{"rendered":"\n<p><strong>What is the news? <\/strong>The President of India promulgates the IBC Amendment Ordinance 2021. It allows the use of Pre-Pack insolvency resolution.<\/p>\n<p><strong>About Insolvency and Bankruptcy Code (Amendment) Ordinance, 2021:<\/strong><\/p>\n<ul>\n<li><strong>IBC Amendment Ordinance 2021 <\/strong>amends the Insolvency and Bankruptcy Code, 2016.<\/li>\n<li><strong>The Amendment <\/strong>allows the use of Pre-Packaged insolvency resolution as an alternative resolution mechanism for MSMEs. The threshold limit to trigger the Pre-Packaged insolvency resolution is between Rs 10 lakh to 1 Crore.<\/li>\n<\/ul>\n<h5><strong>What is Pre-Pack insolvency resolution?<\/strong><\/h5>\n<ul>\n<li>A pre-pack resolution is a form of restructuring that allows creditors and debtors to work on an informal plan and then submit it for approval.<\/li>\n<li><strong>Under this system<\/strong>, financial creditors will agree to the terms of a potential investor. Further, they will seek approval of the resolution plan from the <a href=\"https:\/\/forumias.com\/blog\/company-law-committee-2019-submits-its-report-to-finance-minister\/\">National Company Law Tribunal (NCLT).<\/a><\/li>\n<li><strong>However, the resolution plan cannot be submitted directly to NCLT.<\/strong> It requires<strong> approval of a minimum <\/strong>o<strong>f 66% of financial creditors<\/strong> that are unrelated to the corporate debtor before submission of a resolution plan.<\/li>\n<li><strong>Further<\/strong>, NCLTs also require to consider any application for a pre-pack insolvency proceeding before considering a Corporate Insolvency Resolution Process(CIRP).\n<ul>\n<li><strong>CIRP <\/strong>is the process of resolving corporate insolvency according to the provisions of the Insolvency and Bankruptcy Code, 2016.<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<h5><strong>Benefits of Pre-Packs over CIRP:<\/strong><\/h5>\n<p><strong>Quicker Resolution:<\/strong><\/p>\n<ul>\n<li><strong>One of the key criticisms <\/strong>of the CIRP is the time taken for resolution. At the end of December 2020, over 86% of the ongoing insolvency resolution proceedings crossed the 270-day threshold.<\/li>\n<li><strong>In contrast, the pre-pack resolution process<\/strong> is limited to a maximum of 120 days. Further, only 90 days are available to the stakeholders to bring the resolution plan to the NCLT.<\/li>\n<\/ul>\n<h5><strong>Management Control:<\/strong><\/h5>\n<ul>\n<li><strong>Another key difference between pre-packs and CIRP <\/strong>is that the existing management retains control in the case of pre-packs. Whereas a resolution professional takes control of the debtor as a representative of financial creditors in the case of CIRP.<\/li>\n<\/ul>\n<p><strong>Source: <\/strong><a href=\"https:\/\/indianexpress.com\/article\/explained\/explained-how-does-the-pre-pack-under-insolvency-and-bankruptcy-code-work-7260652\/\"><strong>Indian Express<\/strong><\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>What is the news? The President of India promulgates the IBC Amendment Ordinance 2021. It allows the use of Pre-Pack insolvency resolution. About Insolvency and Bankruptcy Code (Amendment) Ordinance, 2021: IBC Amendment Ordinance 2021 amends the Insolvency and Bankruptcy Code, 2016. The Amendment allows the use of Pre-Packaged insolvency resolution as an alternative resolution mechanism&hellip; <a class=\"more-link\" href=\"https:\/\/forumias.com\/blog\/pre-pack-insolvency-resolution\/\">Continue reading <span class=\"screen-reader-text\">IBC Amendment Ordinance 2021 Allows &#8220;Pre-Pack Insolvency Resolution&#8221;<\/span><\/a><\/p>\n","protected":false},"author":10317,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"footnotes":""},"categories":[1243,1566,3127,1731,9],"tags":[1302],"class_list":["post-100785","post","type-post","status-publish","format-standard","hentry","category-act-and-schemes-new","category-daily-factly-articles","category-economy","category-bill-and-acts","category-public","tag-eco_7","entry"],"jetpack_featured_media_url":"","views":{"total":0,"cached_at":"","cached_date":1704855156},"jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts\/100785","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/users\/10317"}],"replies":[{"embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/comments?post=100785"}],"version-history":[{"count":0,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts\/100785\/revisions"}],"wp:attachment":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/media?parent=100785"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/categories?post=100785"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/tags?post=100785"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}