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ARTICLE · 22 APRIL 2021

Structuring Of Stressed Assets Via Pre-Pack Insolvency Mechanism

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Pre-packaged Insolvency Resolution Process (Prepack) is a hybrid debt restructuring mechanism that integrates both formal and informal (Out of Court settlement) insolvency proceedings.

IndiaInsolvency/Bankruptcy/Re-Structuring
Sandesh Kumar
Sandesh Kumar
Neeraj Dubey
Neeraj Dubey
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INTRODUCTION

Pre-packaged Insolvency Resolution Process (Prepack) is a hybrid debt restructuring mechanism that integrates both formal and informal (Out of Court settlement) insolvency proceedings. It provides a framework to reinstate the stature of stressed company by making their business economically viable, which, in turn, will help the creditors to recover their dues timely. Pre-packs help companies facing trauma due to business failure which affects their ability to service the debts timely. The concept of Pre-pack is already prevailing in advanced jurisdictions such as UK, USA and Europe.

The COVID-19 pandemic induced lockdowns halted economic activities across the world till around May 2020 resulting in economic imbalances and drastic contraction of the global economy. Due to this situation, as a temporary precautionary measure, the Ministry of Law and Justice suspended the initiation of corporate insolvency resolution process of corporate debtors under

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