ICAI Handbook on Pre-packaged Insolvency Resolution Process under the Insolvency and Bankruptcy Code, 2016
Micro, small, and medium enterprises (MSMEs) contribute significantly to gross domestic product and provide employment to a sizeable population. In view of the COVID-19 pandemic to provide an efficient alternative insolvency resolution process under the IBC 2016 for corporate MSMEs, the Insolvency and Bankruptcy Code (Amendment) Ordinance, 2021 was promulgated on 4th April, 2021 to introduce Pre-packaged Insolvency Resolution Process (PPRIP).
PPIRP has the features, which make a CIRP sacrosanct, and has the rigour and discipline of the CIRP. It is informal up to a point and formal thereafter. It blends debtor-in-possession with creditor-in-control. It is neither a fully private nor a fully public process -it allows the company, if eligible under section 29A, to submit the base resolution plan (BRP) which is exposed to challenge for value maximisation. It safeguards the rights of stakeholders as much as in CIRP and has adequate checks and balances to prevent any potential misuse. It entails a limited role of the courts and IPs. Unlike CIRP, it does not yield if there is no resolution plan. Though PPIRP and CIRP are alternate options, some stakeholders may one over the other in certain circumstances.
A Corporate Debtor, which is an MSME under sub-section (1) of the section 7 of the Micro, Small and Medium Enterprises Development Act, 2006, is eligible to apply for initiation of PPIRP, if it-
(i) has committed a default of at least ₹10 lakh;
(ii) is eligible to submit a resolution plan under section 29A of the Code;
(iii) has not undergone a PPIRP during the three years preceding the initiation date;
(iv) has not completed a CIRP during the three years preceding the initiation date;
(v) is not undergoing a CIRP; and(vi)is not required to be liquidated by an order under section 33 of the Code.
ICAI has issued the publication -Handbook on Pre-packaged Insolvency Resolution Process under The Insolvency and Bankruptcy Code, 2016 to help the professionals to understand the provisions relating to PPIRP under the Code and also to know about its applicability and intricacies.
The handbook contains various provisions governing PPIRP which are contained in IBC 2016, the Insolvency and Bankruptcy (Pre-packaged Insolvency Resolution Process) Rules, 2021; and the Insolvency and Bankruptcy Board of India (Pre-packaged Insolvency Resolution Process) Regulations, 2021. It also contains a timeline for completion of PPIRP within the prescribed period of 120 days from the date of its commencement, various Forms related to PPIRP.
Download ICAI Handbook on PPIRP under IBC 2016 Click Here >>
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