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ARTICLE · 15 MAY 2020

Challenges And Drawbacks Of Pre-Packaged Deals In IBC

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A pre-packaged scheme is an arrangement under which stressed company and the purchaser negotiate the sale of all or part of a company's business or assets prior to the appointment of an insolvency professional as administrator.

IndiaInsolvency/Bankruptcy/Re-Structuring
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WHAT IS PRE-PACKAGED IBC SCHEME?

A pre-packaged scheme is an arrangement under which stressed company and the purchaser negotiate the sale of all or part of a company's business or assets prior to the appointment of an insolvency professional as administrator. The completion of such a transaction is conditional on the scrutiny of details by the Insolvency professional appointed and until he gives a nod for the sale to be effected, the consideration by the purchaser is held in an escrow account.

The main objective of bringing in this concept is to aid the insolvency framework, avoid spending time and money in court proceedings & legal battles and directly move to getting a fair resolution for the company, which was the very objective of the IBC in the first place.

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Disclaimer: The information contained in this document is intended for informational purposes only and does not constitute legal opinion, advice or any advertisement. This document is not intended to address the circumstances of any particular individual or corporate body. Readers should not act on the information provided herein without appropriate professional advice after a thorough examination of the facts and circumstances of a particular situation. There can be no assurance that the judicial/quasi-judicial authorities may not take a position contrary to the views mentioned herein.

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