The Insolvency and Bankruptcy Code (Amendment) Bill, 2021 was passed by the Lok Sabha on 28th July 2021 and by the Rajya Sabha on 3rd August 2021.
Salient features of the Bill include
- Pre-pack for MSMEs which blends elements & virtues of both formal and informal insolvency proceedings
- Under the pre-pack process, a resolution plan is negotiated between the debtor & creditors before formal proceedings start. This combines efficiency, speed, cost effectiveness & flexibility with the binding effect of a formal process
Other features of the Bill include
- Minimum threshold default of Rs.10 lakh for initiation of pre-pack insolvency resolution process
- Initiation with the consent of 66% of unrelated financial creditors & special majority of shareholders
- 120 days for the entire process