The Bill is set to replace the IBC Amendment Ordinance 2021 promulgated in April which introduced pre-packs as an insolvency resolution mechanism for micro, small and medium enterprises (MSMEs) with defaults up to Rs 1 crore. This was in response to a demand for offering a simplified version of IBC that saves time and cost of bankruptcy proceedings for small businesses in distress. It is an informal way of stitching together a corporate rescue plan for which seal of approval from a tribunal will be sought subsequently.

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