INSUBCONTINENT EXCLUSIVE:
Government has introduced a bill to provide relief to pandemic hit small and medium enterprisesThe Centre on Monday introduced a bill in Lok
Sabha for providing a resolution process for financially stressed micro, small and medium enterprises (MSMEs), especially those which have
been affected by the Coronavirus pandemic.The bill will amend the insolvency law and offer what is being termed, a pre-packaged resolution
process for such small enterprises.The proposed amendments would help notify the threshold of a default not exceeding Rs 1 crore for
initiation of pre-packaged resolution process
The Centre has already prescribed the threshold of Rs 10 lakh for this purpose.The Insolvency and Bankruptcy Code (Amendment) Bill, 2021,
relief for pandemic affected MSMEs.The bill seeks to have a new chapter in the Code to facilitate pre-packaged insolvency resolution process
for corporate persons that are MSMEs.Under a pre-packaged process, main stakeholders such as creditors and shareholders come together to
identify a prospective buyer and negotiate a resolution plan before approaching the National Company Law Tribunal (NCLT)
to specify a minimum threshold of not more than Rs 1 crore for initiating pre-packaged insolvency resolution process as well as provisions
for disposal of simultaneous applications for initiation of insolvency resolution process and pre-packaged insolvency resolution process,
pending against the same corporate debtor.There would be a penalty for fraudulent or malicious initiation of pre-packaged insolvency
resolution process or with intent to defraud persons, and for fraudulent management of the corporate debtor during the process.Further,
punishment would be meted out for offences related to pre-packaged insolvency resolution process.
