According to the ordinance, it is considered expedient to provide an efficient alternative insolvency resolution process for MSMEs to ensure a quicker, cost-effective and value maximising outcomes for all stakeholders, in a manner which is least disruptive to the continuity of their businesses and which preserves jobs.
"... in order to achieve these objectives, it is considered expedient to introduce a pre-packaged insolvency resolution process for corporate persons classified as micro, small and medium enterprises," it added.
Soumitra Majumdar, partner, J Sagar Associates, said the IBC Amendment Ordinance, 2021, would make available the pre-packaged route to genuine and viable cases, to ensure least business disruption.
"While modelled on debtor-in-possession approach, it vests significant consent rights to the financial creditors, such that the mechanism cannot be misused by errant promoters.
"Further, adopting the plan evaluation process akin to Swiss Challenge, it retains competitive tension such that promoters propose plans with least impairment to rights and claims of creditors," Majumdar noted.
IBC provides for a market-linked and time-bound resolution of stressed assets.
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