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ARTICLE · 16 APRIL 2021

Pre-Packaged Insolvency

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The Government on April 4, 2021 notified the Insolvency and Bankruptcy Code (Amendment) Ordinance, 2021 ("IBC Ordinance, 2021") amending the Insolvency and Bankruptcy Code, 2016 ("IBC")...

IndiaInsolvency/Bankruptcy/Re-Structuring
Alishan Naqvee
Alishan Naqvee
Swet Shikha
Swet Shikha
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The Government on April 4, 2021 notified the Insolvency and Bankruptcy Code (Amendment) Ordinance, 2021 ("IBC Ordinance, 2021") amending the Insolvency and Bankruptcy Code, 2016 ("IBC") to introduce pre-packaged insolvency resolution process ("Pre-Packaged Insolvency") for Micro, Small and Medium Enterprises ("MSMEs"). The Government has also introduced the Insolvency and Bankruptcy (Prepackaged Insolvency Resolution Process) Rules, 2021 ("Pre-Packaged Insolvency Rules, 2021") with effect from April 9, 2021.

Background: For some time now, IBC has been criticized for failing to bring successful resolution in a vast majority of cases. One of the main reasons for 'below the expectation' success of IBC in reviving the stressed businesses has arguably been 'ouster of the promoters' of the company. Neither the committee of creditors nor the resolution professionals are in many cases equipped to take timely and fruitful business decisions, and it is the promoters who have

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