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The Corporate Affairs Ministry (MCA) has come out with rules to operationalise the recently introduced pre-packaged insolvency resolution process (PPIRP) for corporate debtor categorised as MSMEs.
It has also now notified ₹10 lakh as the minimum amount of default for which PPIRP can be initiated for Corporate MSMEs. The facility of PPIRP is not available for MSMEs that are run as sole proprietorships or partnerships.
Put simply, a MSME that has not met its payment obligation of ₹10 lakh could either on its own initiate a pre-pack resolution, or lenders representing 66 per cent of the debt of the business could initiate the PPIRP.
The MCA has also now specified the format of the application form (form I) by a corporate applicant for initiation of PPIRP under the Insolvency and Bankruptcy Code.
It maybe recalled that the President Ram Nath Kovind had on April 4 given his assent to the ordinance promulgated for introduction of PPIRP in the country. Nearly 5-6 lakh corporate MSMEs in the country can potentially benefit from the facility of PPIRP.
Post the promulgation of the ordinance, the insolvency regulator Insolvency and Bankruptcy Board of India (IBBI) had come out with regulations covering various aspects of the PPIRP implementation process.
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