Union Finance Minister Nirmala Sithraman on Wednesday said that Insolvency and Bankruptcy Code (Amendment) Bill, 2021 enables “an efficient alternative insolvency resolution framework for MSMEs.”
In a series of tweets, Sithraman explained the benefits and salient features of the Insolvency bill.
“Salient features of the Bill include pre-pack for MSMEs which blends elements & virtues of both formal and informal insolvency proceedings,” she said in the tweet.
“Other features of the Insolvency and Bankruptcy Code (Amendment) Bill, 2021 include guidance and oversight of the resolution professional – Finality of the process, with judicial approval. A process that offers flexibility – Quicker, cost-effective, and value-maximizing outcomes for all stakeholders, ” she added.
According to the tweets, the entire process will only take 120 days. There will be a minimum threshold default of Rs. 10 lakh for the initiation of the pre-pack insolvency resolution process.
The initiation will start only with the consent of 66% of unrelated financial creditors and the special majority of shareholders.
The Insolvency and Bankruptcy Code (Amendment) Bill, 2021 was passed by Rajya Sabha on August 3. The bill provides for a pre-packaged insolvency resolution mechanism for micro, small and medium enterprises (MSMEs).
After moving the bill for consideration, Finance Minister Nirmala Sitharaman said “this bill has been brought keeping in mind the situation in which MSMEs require a lot of help post the pandemic..we are increasing the threshold and coming up with a pre-pack.”
