File No. 30/20/2020-Insolvency Section

Government of India

Ministry of Corporate Affairs

Dated: 08th January, 2021

NOTICE

Invitation of comments from public on Pre-packaged Insolvency Resolution Process under Insolvency and Bankruptcy Code, 2016

 The experience from implementation of the Insolvency and Bankruptcy Code, 2016 (the Code) including evolution of the ecosystem, stabilisation of the processes, growing jurisprudence has prepared ground to look at new initiatives to further improve the effectiveness of the Code. The efficacy of out-of-court workouts in delivering speedier resolutions provided regulators extend the same regulatory exemptions as available to settlements made under the IBC framework was considered and it was felt that Pre-packaged insolvency resolution process (PPIRP) may be introduced under the Code with necessary checks and balances, as an option for resolving insolvency. Government constituted a sub-committee of Insolvency Law Committee (ILC) vide order dated 24.6.2020 to prepare a detailed scheme for implementing pre-pack and prearranged insolvency resolution process.

2. The sub-committee has designed a pre-pack framework within the basic structure of the Insolvency and Bankruptcy Code, 2016, for the Indian market as detailed in their report of October, 2020 (copy enclosed).

3. Public comments are hereby invited on recommendations of Sub-committee of ILC on Pre-packaged Insolvency Resolution Process. Suggestion/comments, if any, along with brief justification may be submitted online therein at the below mentioned web link by the end of business hours on 22nd January, 2021:

https://ibbi.gov.in/webfront/prepack_comment_irp.php

4. Stakeholder may please note that comments should not be sent separately through e-mail or hard copy and should be sent only through the web link created for the purpose.

-Sd/-

(Rakesh Tyagi)

Director, MCA

Pre-packaged insolvency resolution process: India proposes debtor led, creditor consented framework with moratorium and swiss challenge protocol. The Sub Committee proposes a PPIRP under the IBC as a debtor initiated, debtor in possession restructuring route available to all corporate debtors (phased rollout), requiring prior consent of a simple majority of unrelated financial creditors and shareholders; oversight by a Resolution Professional; CoC decision making with 66% approval for plans and 75% for liquidation; moratorium from commencement; independent valuations; optional swiss challenge to maximise value; preservation of section 29A eligibility; and a 90 day market phase plus 30 days for Adjudicating Authority approval, with safeguards against misuse and a call to augment NCLT capacity.