Pre-Packaged Insolvency Process For MSMEs

A. Introduction:

Micro, small and medium enterprises ("MSME") have been contributing greatly to the growth of the Indian economy including by way of employment generation. As on date, there are approximately 26.42 Lakh registered MSMEs in India. The Covid- 19 pandemic has caused great disruption in most businesses and while the larger conglomerates may have a war chest to tide over these times, the majority of MSMEs do not.

In recognition of the role of MSMEs and to offer them some respite from the economic challenges due to the ongoing pandemic, a pre-packaged insolvency resolution process ("PIRP") was introduced by the Ministry of Law and Justice, GOI¹, by way of the Insolvency and Bankruptcy Code (Amendment) Ordinance, 2021 dated April 4, 2021² ("Ordinance").