MCA examining pre-packaged insolvency solutions to cut delay under IBC

By Anjana Das

New Delhi, June 3 (IANS) Prepackaged insolvency resolution, allowing creditors and shareholders with a pre-negotiated corporate reorganisation plan to approach NCLT, may be taken forward by the government as a key route in the time to come.

Sources said "this will aid the existing framework and cut costs and the time taken during the resolution process. This is part of a consultation process under the law panel of the IBC identifying issues impacting its efficacy and make recommendations.

"Pre-packaged insolvency resolutions scheme allows creditors and shareholders to approach bankruptcy courts with a pre-negotiated corporate organisation", said sources.

There have been consistent arguments over the timeline of IBC resolutions and the government has been seeking views on the pitfalls of the law.

The government had constituted insolvency law panel under the chairmanship of MCA secretary in March 2019 to analyse the funtioning and implementation of the code, identifying the issues impacting the efficiency of the insolvency resolution and liquidation framework for corporates, individual partnership firms under the code and make suitable recommendations to address the issues.

The ministry had also invited comments from stakeholders on the insolvency resolution of group companies, pre-packaged insolvency resolutions realting to the IBC (2016) and Application to Adjudicating Authority Rules, 2016 in April this year.