Indian Government Notifies Pre-Pack Scheme For MSMEs

Last year, the Indian government had announced to bring a special insolvency resolution scheme for micro, small and medium enterprises (MSMEs). In line with its announcement, the government has now notified a pre-packaged insolvency resolution framework for the corporate debtors (classified as MSMEs) with a view to provide an efficient alternative insolvency resolution framework. The framework aims at ensuring a quicker and cost-effective resolution while maximising the value for all stakeholders with the least disruption to the business continuity and preserving the employment at the same time.

As per the framework, the corporate debtors (classified as MSMEs) will have an option to initiate the pre-packaged insolvency resolution process (PIRP). The government has set INR 1 million as the minimum threshold for initiation of PIRP. It is pertinent to note that while the suspension of fresh insolvency proceedings is no more in effect, the government has not yet reduced