Insolvency and Bankruptcy Board of India (Pre-packaged Insolvency Resolution Process) Rules and Regulations, 2021 

• Insolvency and Bankruptcy Board of India (Pre-packaged Insolvency Resolution Process) Regulations, 2021 

Further to the promulgation of an Insolvency and Bankruptcy Code (Amendment) Ordinance, 2021 on 4th day of April, 2021 allowing the use of Pre packs as an insolvency resolution mechanism for Micro, Small and Medium Enterprises (MSMEs) with defaults up to INR 1 Crore (Indian Rupees One Crore only), the Insolvency and Bankruptcy Board of India (“IBBI”) on 9th day of April, 2021 notified the Insolvency and Bankruptcy Board of India (Pre-packaged Insolvency Resolution Process) Regulations, 2021 (PPIRP Regulations) to enable the operation of PPIRP in accordance with the Insolvency and Bankruptcy Code (Amendment) Ordinance, 2021.

The PPIRP Regulations detail the Forms that stakeholders are required to use, and the manner of carrying out various tasks by them as part of the PPIRP. These provide details and manner relating to:

1. Eligibility to act as resolution professional, and his terms of appointment;
2. Eligibility of registered valuers and other professionals;
3. Identification and selection of authorised representative;
4. Public announcement and claims of stakeholders;
5. Information memorandum;
6. Meetings of the creditors and committee of creditors;
7. Invitation for resolution plans;
8. Competition between the base resolution plan and the best resolution plan;
9. Evaluation and consideration of resolution plans;
10. Vesting management of corporate debtor with resolution professional;
11. Termination of PPIRP.
    .

The said regulations shall be effective from the date it was notified i.e. 9th day of April, 2021.

The complete text of the Notification may be viewed at below link:

https://www.ibbi.gov.in/uploads/legalframwork/0dd40b82af7a770d5e89c0d9e37bdb45.pdf

• Insolvency and Bankruptcy Board of India (Pre-packaged Insolvency Resolution Process) Rules, 2021 

In furtherance of the Ordinance and PPIRP Regulations, Ministry of Corporate Affairs (MCA)  has on 9th day of April, 2021 notified the Insolvency and Bankruptcy (Pre-Packaged Insolvency Resolution Process) Rules, 2021 (“PPIRP Rules”) to enable operation of PPIRP in accordance with the Ordinance promulgated on 4th April, 2021.

The PPIRP Rules detail the procedure to be followed by MSMEs, and the manner of carrying out various tasks by them as a part of the PPIRP. These provide details and manner relating to:

1. Filing of application before the NCLT along with the prescribed fee (currently INR 5,000/-).
2. Format of application and format of affidavit to be annexed with it.
3. List of instructions to be followed by applicant for approaching concerned Bench at NCLT.

The said PPIRP Rules shall be effective from the date it was notified i.e. 9th day of April, 2021.

The complete text of the Circular may be viewed at below link:

http://www.mca.gov.in/Ministry/pdf/InsolvencyandBankruptcyRules_12042021.pdf

Last updated: 22/04/2021

Article contributed by:

Luv Malhotra

Associate Director- Corporate Secretarial

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