The Hon'ble President of India promulgated an ordinance
being the Insolvency and Bankruptcy Code (Amendment) Ordinance,
2021 dated 4 April 2021 (Ordinance) which inter-alia added
Part III-A to the Insolvency and Bankruptcy Code, 2016 (IBC),
introducing a framework for prepackaged insolvency resolution
(Prepack) for corporate debtors qualifying as micro, small and
medium enterprises (MSMEs). The Ordinance comes in the backdrop of
the Covid-19 pandemic on MSMEs given that the pandemic exposed many
of such businesses to severe financial distress. Last year, around
the same time, recognizing the need for protecting smaller
businesses, the Government of India, by way of a notification dated
24 March 2020, had also raised the minimum threshold for initiating
corporate insolvency resolution processes (CIRP) to INR 1 crore
(approx. USD 130,000) from earlier INR 1 lakh (approx. USD 1300).
This was followed by a 1 (one) year suspension on initiation of any
new insolvency
