Pre-pack insolvency a success for five companies

• The Pre-packaged Insolvency Resolution Process (PPIRP) has resulted in the full settlement of operational creditors' claims in five cases.

Pre-Packaged Insolvency Resolution Process (PPIRP):

• Designed for Faster Relief for Small Businesses
• Launched in April 2021 to help micro, small and medium-sized businesses (MSMEs) struggling during the COVID pandemic
• the PPIRP offers a quicker and more flexible way to resolve financial difficulties compared to the standard insolvency process.

How it Works: A Collaborative Approach

• Before going to court, the MSME and its creditors work together to create a recovery plan.
• Once a majority of creditors agree to the plan, it's submitted to the National Company Law Tribunal (NCLT) for approval. This resembles an out-of-court settlement.

Faster Resolution with Less Disruption

• By finalizing the plan beforehand, the PPIRP significantly cuts down on the time and disruption involved in resolving insolvency compared to the traditional process.
• The initiative is entirely voluntary on the part of the MSME.

PRELIMS TAKEAWAY

• INSOLVENCY AND BANKRUPTCY CODE