Insolvency and Bankruptcy Code (Amendment) Ordinance, 2021

Last updated: 06 April 2021

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The Insolvency and Bankruptcy Code (Amendment) Ordinance, 2021, has been introduced to address the financial distress faced by Micro, Small, and Medium Enterprises (MSMEs) due to the COVID-19 pandemic. It introduces a 'pre-packaged insolvency resolution process' as an alternative mechanism for MSMEs, aiming for quicker, cost-effective, and value-maximising outcomes. This new process is designed to be less disruptive to businesses and help preserve jobs.

MINISTRY OF LAW AND JUSTICE (Legislative Department) New Delhi, the4th April,2021/Chaitra14,1943 (Saka) THE INSOLVENCY AND BANKRUPTCY CODE (AMENDMENT) ORDINANCE, 2021 NO. 3 OF 2021 Promulgated by the President in the Seventy-second Year of the Republic of India. An Ordinance further to amend the Insolvency and Bankruptcy Code, 2016. WHEREAS COVID-19 pandemic has impacted businesses, financial markets and economies all over the world, including India, and has impacted the b

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FAQ :

The ordinance aims to provide an efficient alternative insolvency resolution process for corporate persons classified as micro, small, and medium enterprises (MSMEs) to address their specific needs arising from the COVID-19 pandemic.

The ordinance introduces a 'pre-packaged insolvency resolution process' (PIRP) for MSMEs, which is designed to be quicker, more cost-effective, and value-maximising.

Corporate debtors classified as micro, small, or medium enterprises are eligible. There are also conditions related to not having undergone insolvency recently, not being under liquidation, and eligibility to submit a resolution plan.

The pre-packaged insolvency resolution process is intended to be completed within a period of 120 days from its commencement date.

If a resolution plan is not approved by the committee of creditors within 90 days, the resolution professional must file an application with the Adjudicating Authority for the termination of the pre-packaged insolvency resolution process.

The ordinance came into force at once upon its promulgation.