Introduction of Pre-packaged Insolvency Resolution Process under the Insolvency and the Bankruptcy Code (IBC)
Based on the experiences from the implementation of the IBC since its introduction in 2016, The Insolvency and Bankruptcy Board of India (IBBI) has attempted to new initiatives to further improve the effectiveness of the Code. In this respect, it has been decided by the insolvency regulator to form an Insolvency Law Sub-Committee which is supposed to study and prepare the regulatory framework for Pre-packaged Insolvency Resolution Process (PPRIP) which shall include pre-requisite for initiation of PPRIP in terms of default and threshold, appointment of Insolvency Professional, role and responsibility of committee of creditors, moratorium, expected cost of process, timelines for completion of process etc. The committee may also consult various experts and other stakeholders as part of the process.
A pre-pack is a pre-planned process in which a financially distressed company and its creditors reach an agreement with a buyer for its sale prior to initiating insolvency proceedings. It has been extensively used in the United States and the United Kingdom since the 1980s. Pre-packs avoid lengthy negotiations with creditors after the commencement of insolvency proceedings, enabling expeditious insolvency resolution with minimal involvement of courts and tribunals.
