A Quick Boon For MSME’s - Pre-Packaged Insolvency Resolution Process

PPIRP is aimed at helping a Corporate Debtor(MSME) restructure its debts so that it may start afresh.It is an informal arrangement for the resolution of the debt of a stressed company through an agreement between creditors and debtors without initiation of insolvency proceedings and thus alleviating the stress attached.

How PPIRP can be initiated?

(A) Pre-initiation phase:

The promoter/ management of the corporate MSME has to initially obtain approval of 66% of financial creditors and in their absence operational creditors for initiating PPIRP and an Insolvency Professional is appointed. The approval of members by way of special resolution is also required which can also be obtained by 3/4th directors/ partners of the Corporate Debtor. The Base resolution plans have to be then formulated by the Corporate Debtor which has to be approved by the 66% Financial Creditors.?

• Once the base plan is approved by the members and financial creditors of the Company, the same is moved before the Adjudicating Authority for its approval.
• On receipt of the application, the Adjudicating authority considers and approves the resolution plan which is compliant as per the applicable sections of IBC Code, 2016 and PPIRP regulations.
• The Adjudicating Authority also appoints Resolution Professional to manage the resolution process.

(B) The Post Initiation Phase:

The initiation of PPRIP under the Insolvency and Bankruptcy Laws has come as a silver lining to the dark clouds of the MSME Sector.?The management and employees working for MSME are having a tough time in channelizing and carrying the day-to-day business of the company post covid-19. This suffering could lead to ultimate closure of the business but with the amendment in the IBC with the PPIRP Laws there is a new scope of resolution and revival for the MSMEs.?

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Aruna Rajput(CRM) 
Mobile: 844845914