{"id":86584,"date":"2020-07-29T17:27:09","date_gmt":"2020-07-29T11:57:09","guid":{"rendered":"https:\/\/factly.forumias.com\/?p=16602"},"modified":"2020-07-29T17:27:09","modified_gmt":"2020-07-29T11:57:09","slug":"explained-what-are-pre-packs-under-the-present-insolvency-regime","status":"publish","type":"post","link":"https:\/\/forumias.com\/blog\/explained-what-are-pre-packs-under-the-present-insolvency-regime\/","title":{"rendered":"Explained: What are pre-packs under the present insolvency regime?"},"content":{"rendered":"\n<p><strong>News: <\/strong>The Ministry of Corporate Affairs(MCA) has set up a committee to look into the possibility of including \u201cpre-packs\u201d under the current insolvency regime to offer faster insolvency resolution under the Insolvency and Bankruptcy Code (IBC),<\/p>\n\n\n\n<p><strong>Facts:<\/strong><\/p>\n\n\n\n<ul class=\"wp-block-list\"><li><strong>Pre-Pack: <\/strong>It<strong> <\/strong>is a pre-planned process in which a financially distressed company and its creditors reach an agreement with a buyer for its sale prior to initiating insolvency proceedings.The sale then takes place on the date of initiation of insolvency proceedings or after the appointment of insolvency administrator.<ul><li>In India\u2019s case, such a system would likely require the approval of the resolution plan from the National Company Law Tribunal (NCLT).<\/li><\/ul><\/li><li><strong>Global Scenario: <\/strong>The pre pack system of insolvency proceedings has become increasingly popular in the UK and Europe over the past decade.<\/li><li><strong>Benefits:<\/strong><ul><li>Pre-packs avoid lengthy negotiations with creditors after the commencement of insolvency proceedings enabling expeditious insolvency resolution with minimal involvement of courts and tribunals.&nbsp;<\/li><li>In the case of pre-packs, the incumbent management retains control of the company until a final agreement is reached.<\/li><\/ul><\/li><li><strong>Drawback:&nbsp;<\/strong><ul><li>The key drawback of a pre-packaged insolvency resolution is the reduced transparency compared to the Corporate Insolvency Resolution Process(CIRP) as financial creditors would reach an agreement with a potential investor privately and not through an open bidding process.<\/li><\/ul><\/li><\/ul>\n\n\n\n<p><strong>Additional Facts:<\/strong><\/p>\n\n\n\n<ul class=\"wp-block-list\"><li><strong>Insolvency and Bankruptcy Code(IBC): <\/strong>It was implemented through an act of Parliament in 2016.It provides for a time-bound process to resolve insolvency and the code applies to companies, partnerships and individuals.&nbsp;<\/li><\/ul>\n","protected":false},"excerpt":{"rendered":"<p>News: The Ministry of Corporate Affairs(MCA) has set up a committee to look into the possibility of including \u201cpre-packs\u201d under the current insolvency regime to offer faster insolvency resolution under the Insolvency and Bankruptcy Code (IBC), Facts: Pre-Pack: It is a pre-planned process in which a financially distressed company and its creditors reach an agreement&hellip; <a class=\"more-link\" href=\"https:\/\/forumias.com\/blog\/explained-what-are-pre-packs-under-the-present-insolvency-regime\/\">Continue reading <span class=\"screen-reader-text\">Explained: What are pre-packs under the present insolvency regime?<\/span><\/a><\/p>\n","protected":false},"author":61,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"footnotes":""},"categories":[3127],"tags":[869,4147],"class_list":["post-86584","post","type-post","status-publish","format-standard","hentry","category-economy","tag-insolvency-and-bankruptcy-code","tag-pre-pack","entry"],"jetpack_featured_media_url":"","views":{"total":0,"cached_at":"","cached_date":1704850665},"jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts\/86584","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\/61"}],"replies":[{"embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/comments?post=86584"}],"version-history":[{"count":0,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts\/86584\/revisions"}],"wp:attachment":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/media?parent=86584"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/categories?post=86584"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/tags?post=86584"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}