The insolvency and bankruptcy code (amendment) ordinance, 2021
April 8, 2021
The Insolvency and Bankruptcy Code (Amendment) Ordinance, 2021 (“Ordinance”), promulgated on 4 April 2021, adds a new Chapter III-A to the Insolvency and Bankruptcy Code, 2016 (“Code”). The Chapter introduces a new pre-packaged insolvency resolution process (“PPIRP”) for micro, small, and medium enterprises (“MSMEs”). The key features of the PPIRP are discussed below.
Objectives of the PPIRP
The Preamble of the Ordinance notes the impact that Covid-19 has had on businesses, financial markets and economies all over the world. In this context, and keeping in mind the unique challenges faced by MSMEs and their significant contribution to the Indian economy, the Preamble notes that an efficient alternative insolvency resolution process for MSMEs under the Code is required. Given this, the PPIRP is introduced to ensure quicker, cost-effective and value maximising outcomes for all the stakeholders, in a manner which is least disruptive to the continuity of their businesses and which preserves jobs.