Challenges in Implementation of Pre-packaged Insolvency Resolution Process - Way Forward

The Micro, Small and Medium enterprises (MSME) are critical for India's economy as they contribute significantly to its gross domestic product and provide employment to a sizable population. The Micro, Small and Medium Enterprises Development (MSMED) Act, 2006 was introduced to provide for facilitating the promotion and development and enhancing the competitiveness of MSMEs and for matters connected therewith or incidental thereto. Read more about challenges in implementation of pre-packaged Insolvency Resolution Process in this research paper.

The MSMEs are also among the most severely impacted from the spread of Covid-19. In order to curb the situation that had arisen in the wake of Covid-19, the Government of India, in 2020, had announced the Atmanirbhar Bharat Abhiyaan Economic Relief Package wherein the Eligibility for MSMEs was revised based on investment and turnover so as to provide maximum benefit to such enterprises.

Additionally, many of the MSMEs are also in the verge of bankruptcy due to sudden fall in the business and their inability to clear off the dues on time. It was thus considered necessary by the Government to urgently address the specific requirements of these enterprises relating to the resolution of their insolvency and to provide an efficient alternative insolvency resolution process for corporate persons classified as MSME under the Insolvency and Bankruptcy Code, 2016 (IBC), ensuring quicker, cost-effective and value maximizing outcomes for all the stakeholders. Accordingly, a pre-packaged insolvency resolution process (PPIRP) for corporate persons classified as micro, small and medium enterprises has been introduced in 2021.

It’s important to thoroughly research and evaluate any advisory service provider, including RBSA Advisors, by considering factors such as their reputation, experience, track record, credentials, and client testimonials. It’s also recommended to seek multiple opinions and conduct due diligence before making any financial decisions. Consulting with qualified professionals and seeking legal or financial advice is always advisable when dealing with insolvency or business turnaround situations.