oppn parties Pre-Pack Scheme For MSMEs: Excellent Move

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  • Neha Bora was subsequently released and Dipke is to appear before a magistrate today at noon
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  • The Supreme Court of India upheld the Bombay High Court's decision quashing the 2020 write-off of ₹8,415 crore in additional tier-1 bonds issued by Yes Bank (Yes Bank). The court ruled that the bank's administrator lacked the authority to extinguish the bonds under the final reconstruction scheme, strengthening bondholders' claims
  • The Supreme Court issued notices to the Election Commission of India, Delhi Police and opposition leaders, including Rahul Gandhi and Akhilesh Yadav, in separate petitions concerning electoral-roll revision and protests held in Delhi on October 10–12. The court also directed the preservation of CCTV footage linked to allegations of police excesses
  • The Supreme Court ruled that a person converting from Hinduism to Islam cannot automatically claim backward-class reservation benefits in the new religious community solely on the basis of their previous caste status. The judgment upheld the Madras High Court's decision striking down a 2024 Tamil Nadu government order that permitted such certification for specified communities
  • The Election Commission of India ordered a Special Summary Revision of electoral rolls in 14 states and three Union Territories, using January 1, 2027, as the qualifying date for voter eligibility. The draft rolls are scheduled for publication on November 12, claims and objections will be accepted until December 11, and the final rolls are due on January 4, 2027
Delhi HC refuses to ban CJP's Tiranga rally at Central Park in Connaught Place today /////// Police says will control and regulate it /////// NDMC closes the park for the public on Friday and Saturday
oppn parties
Pre-Pack Scheme For MSMEs: Excellent Move

By Linus Garg
First publised on 2021-04-09 11:05:06

About the Author

Sunil Garodia Linus tackles things head-on. He takes sides in his analysis and it fits excellently with our editorial policy. No 'maybe's' and 'allegedly' for him, only things in black and white.

The government has done well to introduce a pre-pack resolution scheme for stressed micro, small and medium enterprises (MSME) with defaults up to Rs 1 crore. Under this scheme, even before the company goes into liquidation under the IBC, the existing management can propose a resolution plan to the creditors, keeping the operational creditors fully secured. If 66% of the creditors approve the plan, they can approach the NCLT for final approval. The whole process has to be completed in 120 days.

During this time, the company will continue to be run by the existing management. This will ease the resolution process and will initially make it comparatively litigation-free as promoters will not create stumbling blocks in the process. But if 66% of the creditors wish, they can press for a Resolution Professional (RP) to run the management even during the process after getting permission from court. The RP can invite competing bids under some circumstances, the main being if the claims of the operational creditors are not proposed to be settled in full. Once 66% of the creditors approve the plan submitted by the debtor, they can apply for approval by the NCLT. Any proposal submitted by the debtors with the intention to defraud will attract penalty.

This is a good move as it will ease the process for MSMEs. There will be less litigation and the NCLT will also not be burdened too much. The timeline allowed is also faster compared to the 330 (revised from 270 days) days in the IBC. If the main motive of the IBC is to work for faster redeployment of stressed assets then this is an excellent way to go about it. If existing promoters are allowed to restructure the company without losing control and if they can find the capital to do so, they must be given a chance. Depending upon the success of the scheme, it can later be extended for bigger defaulters. 

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