CURRENT AFFAIRS
CURRENT AFFAIRS
Description
The Pre-packaged Insolvency Resolution Process (PPIRP) has resulted in the complete settlement of operational creditors' claims in five cases.
About The Pre-Packaged Insolvency Resolution Process
It was introduced in April 2021, following the Covid epidemic, to address the burden of small and medium-sized businesses. The premise was that the resolution of troubled MSMEs required a different approach due to the nature of their enterprises.
Pre-packaged insolvency proceedings are an alternative and faster resolution option for micro, medium, and small businesses in financial difficulties.
The process involves debtors and creditors arranging a settlement plan prior to formal insolvency proceedings.
Once the creditors have agreed the pre-packaged resolution plan, it is presented to the National Company Law Tribunal (NCLT) for approval. It's akin to an out-of-court settlement procedure.
Before formally commencing the bankruptcy process, the debtor and creditor develop a draft resolution plan.
The plan is filed to the NCLT after it has been prepared and agreed by the required majority of creditors.
The debtor initiates the prepackaged insolvency process voluntarily.
Significance- Because the resolution plan is discussed and finalized prior to filing with NCLT, it decreases the time required for resolution compared to the corporate insolvency resolution procedure, with less disruptions.
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