Government has announced an ordinance to amend the Insolvency & Bankruptcy Code (IBC) on April 4.
As per the ordinance, the government has amended the IBC to provide for pre-packaged resolution framework for micro, small and medium enterprises (MSMEs) through promulgation of an ordinance.
The alternative insolvency resolution framework is expected to bring a quicker and more cost-effective process for MSMEs that would maximise outcome for all stakeholders, in a manner which is least disruptive to the continuity of their businesses and which preserves jobs.
As many MSMEs have been impacted by the coronavirus pandemic and experts opined that the latest amendment, which comes less than two weeks after the suspension of certain IBC provisions ended, is a welcome move.
Now, Micro, Small and Medium Enterprises (MSMEs) can seek resolution for their stress through the pre-packaged process under the Insolvency and Bankruptcy Code (IBC).
All resolution plans under the IBC need to be approved by the National Company Law Tribunal (NCLT).