Critical Analysis of Pre-Packaged Insolvency Resolution Process in India

A
Dissertation
On
Critical Analysis of Pre- Packaged Insolvency Resolution Process in India
Submitted for
Subject Code -GEN 110
II – Semester
LLM(CORP)-A
By
Nitika Upadhyaya
03017707020
Supervisor
Dr. Neelam Chawla
Associate Professor
VIVEKANANDA INSTITUTE OF PROFESSIONAL STUDIES

2021
DECLARATION
I, hereby declare that the dissertation entitled “Critical Analysis of Pre- Packaged
Insolvency Resolution Process in India”is based on original research undertaken by
me and it has not been submitted in any University for any degree or diploma.
Place- New Delhi

Date -12 August 2021 Signature of the student
Name of the student – Nitika Upadhyaya
Enrollment No.- 03017707030
ii
CERTIFICATE
This is to certify that the dissertation entitled “Critical Analysis of

Pre- Packaged Insolvency Resolution Process in India” has been
prepared by Nitika Upadhyaya, a student of Vivekananda Law
School, Vivekananda Institute of Professional Studies under my
supervision and guidance. I recommend it for evaluation.
Place – New Delhi

Date – 12 August 2021 Signature of the Guide
iii
ACKNOWLEDGEMENTS
It is my extreme pleasure to express my deep sense of thank and

gratitude to my mentor Dr. Neelam Chawla mam for her
overwhelming attitude to help her students and her timely advice
which helped me to complete my dissertation on time. I owe a deep
sense of gratitude to our dean Dr. Rashmi Salpekar and all the faculty
members of the Department of law and Legal Studies (LLM) for their
kind help, guidance and cooperation throughout period of my research
without whose guidance this research would not have been possible.
I would also like to thank the teachers under library department of our
college for providing ample of material regarding my research for the
completion of my dissertation. I would also like thank my college
Vivekananda Institute of Professional Studies, Delhi for giving us this
opportunity to work on this dissertation.
It is my privilege to thank my parents and brother for their much-needed

encouragement and belief on me which helped me to complete my
research work with great zeal. Last but not the least I am extremely
thankful to my friends for their constant support and suggestions while
editing the dissertation. Working on this dissertation was not only a great
experience for me but also chance to enhance my knowledge related to
topic of my dissertation. I am extremely grateful to everyone who
were instrumental in defining the path of my research to complete my
dissertation. It truly has been a rewarding experience.
CONTENTS
1.Declaration......................................................................................................ii
2.Certificate........................................................................................................ iii
3.Acknowledgements..........................................................................................iv
4.List of Abbreviations......................................................................................vii-ix
5.List of Cases................................................................................................... x-xi
6.Chapters......................................................................................................... 1-99
I. Chapter I-Introduction and Research Methodology..................................1-10
1.1. Statement Of Problem..................................................................................1-3
1.2. Hypothesis..................................................................................................... 3
1.3. Objectives......................................................................................................4
1.4. Research Methodology...................................................................................4
1.5. Literature Review..........................................................................................5-8
1.6. Chapterization...............................................................................................9-10
II.Chapter II – Provisions of Corporate Insolvency Resolution Process...........11-34
2.1. Background..................................................................................................11-24
2.2 Regulation of Corporate Insolvency Resolution Process in India..................24-31
2.3. Effectivity Of CIRP......................................................................................31-32
2.4. Jurisdiction Of NCLT During Dispute under CIRP......................................32-33
III. Chapter III – Provisions of Pre-Pack Insolvency Resolution Process....33-61
3.1. Regulation of Pre-Packaged Insolvency Resolution Process in India............33-38
3.2. Minimum Amount of Default.......................................................................39
3.3. Pre-condition to initiate PPIRP.....................................................................39-40
3.4. Person eligible to file the application....................................................................40-42
3.5. Preference to PPIRP over CIRP proceedings................................................42
3.6. Duties of insolvency professional before initiation of CIRP................................42-43
3.7. Procedure after making application for initiating PPIRP..............................43-45
3.8. Time Limitation for completion of PPIRP.....................................................45
3.9. Public Declaration........................................................................................45-46
3.10. Duties of Resolution Professional after initiation of proceedings...............46-47
3.11. Preliminary Information Memorandum......................................................47-48
3.12. Management of Affairs of CD…........................................................................48-49
3.13. Committee of Creditors...............................................................................49-50
3.14. Resolution Plan...................................................................................................50-54
3.15. Termination of PPIRP.........................................................................................54-55
3.16. Penalties...................................................................................................... 56
3.17. Pre-packaged Insolvency Resolution Process Vis-à-vis Corporate Insolvency
Resolution Process.............................................................................................. 57-61
IV. Chapter IV – Pre-Pack Insolvency Resolution Process: International
Perspective......................................................................................................... 62-78
4.1. Expedited Reorganization Proceedings (UNICITRAL).....................................64-68
4.2. Pre-Plan Sale in USA............................................................................................68-71
4.3. Pre-Pack Sale in United Kingdom.......................................................................71-75
4.4. Report Of Working Group V (Insolvency Law)................................................75-78
V. Chapter V - Conclusion and Suggestions.........................................................79-88
7.Bibliography...................................................................................................89-93
TABLE OF ABBREVIATIONS
1. AA Adjudicating Authority
2. ADB Asian Development Bank
3. AIR All India Reporter
4. AT Appellate Tribunal
5. Bankr. Bankruptcy
6. BLRC Bankruptcy Law Reforms Committee
7. BOD Board of Directors
8. CD Corporate Debtor
9. Chap Chapter
10. CIRP Corporate Insolvency Resolution Process
11. Co. Company
12. CoC Committee of Creditors
13. COVID-19 Coronavirus Disease
14. DIP Debtor in Possession
15. EU European Union
16. FC Financial Creditor
17. FV Fair Value
18. FY Financial Year
19. IBC The Insolvency and Bankruptcy Code, 2016
20. IBBI Insolvency and Bankruptcy Board of India
21. GDP Gross Domestic Product
22. ICA Inter Creditor Agreement
23. ILC Insolvency Law Committee
24. IM Information Memorandum
25. IMF International Monetary Fund
26. Info Information
27. IP Insolvency Professional
28. IPR Insolvency Practitioner
29. IRP Interim Resolution Professional
30. IRPC Insolvency Resolution Process Cost
31. IU Information Utility
32. LLP Limited Liability Partnership
33. ltd Limited
34. MCA Ministry of Corporate Affairs
35. MPM Index Manufacturing Purchasing Manager's Index
36. MSMEs Micro, Small and Medium Enterprises
37. NBFCs Non-Banking Financial Companies
38. NCLAT National Company Law Appellate Tribunal
39. NCLT National Company Law Tribunal
40. NEP New Education Policy
41. NPA Non-Performing Asset
42. OC Operational Creditor
43. PCD Pre-pack Commencement Date
44. PIM Preliminary Information Memorandum
45. PPIRP Pre-packaged Insolvency Resolution Process
46. Q1 Quarter 1
47. Q2 Quarter 2
48. Q3 Quarter 3
49. Q4 Quarter 4
50. RBI Reserve Bank of India
51. RA Resolution Applicant
52. RP Resolution Professional
53. RV Resolution Value
54. SC Supreme Court
55. SCB Scheduled Commercial Bank
56. SCC Supreme Court Cases
57. Sch Schedule
viii
58. Sec Section
59. SoA Scheme of Arrangement (Companies Act, 2013)
60. SEBI Securities and Exchange Board of India
61. SIP Statement of Insolvency Practice 16 (of UK)
62. SIRP Special Insolvency Resolution Process
63. SMA Special Mention Account
64. Sub Subject
65. UK United Kingdom
66. UNCITRAL United Nations Commission on International Trade
Law
67. USA United States of America
68. v. Versus
LIST OF CASES
1. ArcelorMittal India Private Limited v. Satish Kumar Gupta,
AIR 2019 SC 9405….............................................................................14,15
2. Binani Industries Ltd. v. Bank of Baroda (2018) NCLAT 521…............14
3. Committee of Creditors of Essar Steel India Limited (through
Auth.signatory) v. Satish Kumar Gupta, (2020) 8 SCC 531….................14
4. Encote Energy (India) Pvt. Ltd. v. V. Venkatachalam, (2019)
Company Appeal (AT) 1226…....................................................................33
5. Gujarat Urja Vikas Nigam Restricted v. Amit Gupta
AIR 2021 SC 0157…..............................................................................33
6. In re Ditech Holding Corp., 2019 WL 4073378
(Bankr. S.D.N.Y. Aug 28,2019)..............................................................69
7. In Re SunGard Availability Services Capital Inc. No. 19-22915 (ROD)
(2019)...................................................................................................... 71
8. In Re True Temper Sports Inc. No. 09 -13446 (PJW) (2009)...................71
9. In Re Vegas Investors LLC & others v. Henry Shinners,Finbarr O'Connell

& others (2018) EWHC 186(Ch)..........................................................74
10. Kridhan Infrastructure Pvt. Ltd. v. Venkatesan Sankaranarayan,
AIR 2020 SC 3299…...............................................................................14,41
11. Lokhandwala Kataria Construction Private Ltd Vs. Nisus Finance &
Investment Managers LLP AIR 2017 SC 9279…......................................16
12. M/s. Innoventive Industries Ltd. Vs. ICICI Bank (2018) 1 SCC 407…......15
13. Manoj Kumar Das Vs. Horizon Dwelling Pvt Ltd, (2020) Co. App. (AT)
567….........................................................................................................16
14. Mobilox Innovations Pvt Ltd v. Kirusa Software Pvt Ltd. AIR 2017 SC
4532…........................................................................................................14
15. Parvinder Singh Vs. Intec Capital Ltd., (2019) Co. App. (AT) 968…........16
16. Roma Enterprises v. Mr. Martin S.K. Golla, Resolution Professional
(2018) Company Appeal (AT) 232….................................................................33
17. Sri Krishna Constructions v. Vasudevan, R.P. of Tiffins Barytes
Asbestos & Paints Ltd (2019) Company Appeal (AT) 619…............................33
18. Surendra Trading Company v. Juggilal Kamlapat Jute Mills Company Ltd
AIR 2017 SC 8400…......................................................................................14
19. Swiss Ribbons Pvt. Ltd. v. Union of India (2019) 4 SCC 17…......................13,15.33
CHAPTER I- INTRODUCTION AND
RESEARCH METHODOLOGY
1.1 STATEMENT OF PROBLEM
Under IBC, 20161 one of the main issues that was raised by the creditors were regarding
the very slow progress in the resolution of distressed companies with regards to
CIRP which was provided as process to be followed in case of insolvency and
liquidation. The pace with which the adjudicating authorities have functioned to deliver
an effective and efficient regulatory framework in the matters of Insolvency and
Bankruptcy is unprecedented, but still the statutory time period of 330 days. Under
the Insolvency and Bankruptcy Code is not being achieved in most of the cases.394 days
are taken for any successful resolution at an average which is unfavourable to the
interest of the stakeholders. It was recorded that out of total 3312 case which have
been admitted to be resolved under IBC there were only 780 cases which resulted in
successful liquidation meanwhile 1961 cases are still in progress under CIRP2.
When we talk about CIRP then we have knowledge that in this process there is very
high involvement of the judiciary which ultimately leaves no space at all for the outside
settlement that means settlement which is done out of the court and resolution
process does not become successful unless there is approval of the authority and
takes a very long time to do so.
According to some financial experts the main reason for need of involvement of judicial
authority is that our market till now is not at all considered to be mature enough to have
an informal bankruptcy settlement. But somehow now even Corporate Ministry and
commission created feels that there is need to accept and trust market a much mature
way to resolve the insolvency procedure through pre-packaged insolvency resolution
process. With India accepting the westernization and policies of the developed
nations for that matter we can take example of New Education Policy, 2020 which also
includes US model of education, we are in the steps of United Kingdom, United
States,
1
The Insolvency and Bankruptcy Code (Act No. 31 OF 2016)
1
2
IBBI, Insolvency and Bankruptcy News Oct- Dec (2019)
2
Singapore, Canada etc which had already accepted and are using pre-packaged
insolvency resolution process since past decades.
Now that after almost four years of implementation of the Code our struggle is still
same the strict adherence of the statutory timeline given under the code, besides the
unreasonable delays, some other issues also emerged in-between such as formal
engagement of third-party advisors, direct and indirect costs, etc. During the time when
IBC was being formulated, the Bankruptcy Law Reforms Committee in its first
report mentioned that “Speed is of quintessence for the operation of IBC and also
ascertained that most vital intent in planning a legal framework for handling rigid
dereliction is that want for the speed."3
Decline in the economy and deteriorating financial condition of the country due to
pandemic situation also shown reduction in applicants for CIRP for betterment of
CD, extending stress period and to meet the creditors expectations. The main
objective of PPIRP is the superior assistance to CD and find a path somewhere between
prerogative characteristics of CIRP and adaptability of out of court settlement. After the
expiration of moratorium period, it is highly expected that there will be increase in
applications for the insolvency.
Its execution is predicted to be aligned with CIRP. So, that stakeholders decide to
liquidate as a last option when there is no other resort left. Also, the delays cost
implicitly to the business by disruption of operation and refusal by service providers,
loss of goodwill, etc. Hence, the main essence is lost somewhere in between the
long- time consuming resolution process. Introducing informal and private
restructuration, costs incurred under CIRP may be reduced a lot and lack of statutory
binding the resolution procedure can become more flexible and also will help to
minimize the post resolution conflicts and litigations and misunderstandings if any
arisen due to court settlement.
Pre-packaged insolvency resolution process is introduced under IBC(Amendment)
Ordinance, 2021. This paper discusses the issue whether pre-packaged insolvency
resolution process is efficient enough to become a good alternative beside regular
corporate insolvency resolution process or not and find out loopholes present in the
resolution process through critically analysing the provisions of Pre-package
insolvency resolution process under IBC(Amendment) Ordinance Bill 2021 with
3
BLRC, The Report of the Bankruptcy Law Reforms Committee, February 2015
special reference to pre-existing corporate insolvency resolution process under
Insolvency and Bankruptcy Code, 2016.
1.2. RESEARCH METHODOLOGY
In the present study, doctrinal method of research has been used to critically analyse
the provisions of pre-packaged insolvency resolution process under Insolvency and
Bankruptcy Code (Amendment) Ordinance, 2021 and its effectiveness in the field of
insolvency and bankruptcy.
The topic is to be explored as it is something which is newly to be implemented in
the corporate world for liquidation of the company and this pre-packed insolvency
resolution process is to be instituted with Insolvency and Bankruptcy Code, 2016.
So, to fulfil main objectives of research the it is utmost important to use qualitative
research methodology to fulfil aim to produce contextual real-world knowledge about
the behaviours, social structures and shared beliefs with regards to concept of pre-
packed offer.
Doctrinal methodology is used for conducting research which is also known as “typical
legal research”. This research is made on the basis of the case laws, statutes and
other legal sources. It can be differentiated from other methodologies as a pure
doctrinal approach does not attempt to look at the effect of the law or how it is applied.
Doctrinal research is the starting point for legal research. The doctrinal methodology can
enclose legal analysis.
It involves source-based research and it would be not common to tackle qualitative or
quantitative research under the doctrinal methodology. Doctrinal analysis will focus on
ancient and contemporary legal sources, such as case laws. It is one of the fundamental
methodologies. This methodology is more interpretive than controlled. It is more
flexible and subjective so it was easier to reflect position as researcher, taking into
account each and every opinion and participation with perception and finally explaining
own point of view and scenario.
Sources were used in the form of existing data and theory present such as bare act of
IBC, news articles and several articles which analysed given under several websites.
Data was analysed further in the research paper. It involved textual analysis in the form
of content, thematic and discourse analysis and also video analysis. This method is
the best for analysis in the descriptive form. The limitation of this research paper is
that IBC(Amendment) Ordinance 2021 which focuses on pre-packaged insolvency
resolution process was passed very recently on 4 April 2021 therefore no case
studies are present as of now to test the veracity of hypothesis hence, only existing
sources and data available is used for testing of hypothesis.
1.3.HYPOTHESIS
Pre-packaged insolvency resolution process in India is speedy and cost effective.
1.4.OBJECTIVES
1.To study background and provisions of corporate insolvency resolution process under
IBC, 2016.
2. To analyse the concept of Pre – Packaged Insolvency Resolution Process and its
provisions under IBC(Amendment) Bill 2021
3. To explore the international perspective of pre-package insolvency resolution
process
4. To identify whether Pre-packaged insolvency package resolution process is efficient

enough to become a good alternative besides regular Corporate Insolvency
Resolution Process and suggest ways for filling in gaps within pre-package
insolvency resolution process for better implementation if any.
1.5.LITERATURE REVIEW
Pre-pack is a new concept for our country but not so new for the whole world.
Author had undergone various research papers and other sources while doing review
of literature for the dissertation. The very first work in field of pre-pack was
UNCITRAL's guide insolvency law4 in 2005 which provides guidelines on expedite
reorganization proceedings equivalent to pre-pack. According to Garrido (20125),
“out-of-court restructuring, which is not seen as fundamentally opposed to formal
insolvency procedures.” Lecturer in law Bo Xie (2016)6, published his book on
comparative insolvency law and argues that “the most important development in
contemporary insolvency law and practice is the shift towards a rescue culture rather
than full creditor satisfaction.” Her book discusses the rise of the pre-pack approach,
which grants indebted person companies to define a clear pre-arranged exit some
time recently entering into formal insolvency procedures which was useful for
introduction to the topic in dissertation. It clarifies the reasons behind the ubiquity of
the UK as gathering law for European companies drawing closer indebtedness.
Highlighting the advantages and deficiencies of the method, Bo Xie examines in
profundity the distinctive approaches received in these different wards to bargain with
artful utilize of pre-packs. She moreover considers proposition to change the adjust
inside UK pre-packaged organizations by embeddings higher transparency and
scrutiny shields. This exceedingly topical ponder could be a must-read for
researchers and lawful specialists working within the areas of corporate bankruptcy
and rebuilding. It'll moreover demonstrate of esteem to indebtedness controllers
owing to its topical and in-depth examination of current improvements within the
law.
Sanjana Rao (20197), in her research paper remarked that, “In India, pre-packs could
change the manner in which insolvency resolution is undertaken. The Indian
economy is grappling with non-performing assets (NPA) that banks and financial
institutions are stranded with after having lent to large corporates who, due to various
reasons, have not been able to service these loans. The banks were also mandated
by the RBI to
4
UNCITRAL, Legislative Guide on Insolvency Law, pg.244, (United Nations Publication Sales No.
E.05.V.10, New York, 2005)
5
Garrido, Jose M. 2012. “Out-of-Court Debt Restructuring”. World Bank Study. World Bank, 2012
6
Bo Xie, Lecturer in Law, Comparative Insolvency Law-The Pre-pack Approach in Corporate Rescue,
Edward Elgar Publishing House ,2016
7
Sanjana Rao, Insolvency Procedures – “Investigating the Pre-Pack Paradigm in India”, Glc Law
Review Volume10 (2019)
commence Corporate Insolvency Resolution Process (CIRP) under The Insolvency and
Bankruptcy Code, 2016 (IBC) and the rules and regulations thereunder against the
named corporates, on their failure to meet certain set targets.” She in her article tries
to clarify the nature of a pre-pack and particularly dissect how a pre-pack
administration would admission within the Indian indebtedness advertise. This article
too investigates whether the execution of pre-packs in India would necessitate a
correction within the existing bankruptcy administrative system and on the off chance
that yes, the degree of such revision. It examines the nature of pre-packs with an extra
centre on their features, as a mode of corporate protect within the Joined together
Kingdom (UK) and the United States of America (US)).
In 2020, David Skeel8, opined in his report about bankruptcy and covid pandemic in
USA pre-pack regime that, “the pre-packaged insolvency resolution process as affected
by pandemic situation. Less than two months into the coronavirus crisis, and despite
the massive infusion funds, a rise in business bankruptcies has already begun and
due to counteract the economic shutdown are effective, an enormous wave of
bankruptcies may come. The framework that eventually led to the current Chapter 11—
bankruptcy's reorganization provisions—was forged in the periodic economic
panics.” He also pointed out that, “the bankruptcy system has three major limitations of
great importance in the current environment: it has proven much more effective at
reorganizing large corporations than small and medium sized businesses; it functions
very differently when the bankruptcy courts are congested; and Chapter 11 depends
on the debtor having financing during the bankruptcy case.” Meanwhile, Rehmat Ali
(2020)9, in his research paper that “in this modern corporate world, the investor
would choose the place where he has more opportunities and protection to his
capital. Favourable substantive and procedural law and rules which are sympathetic
towards redress of his corporate dispute are the requirement of an investor.
Insolvency jurisdictions of UK and USA are more favourable to the foreign investors
because there is a sophisticated and more adequate procedural advantage” and he
also analyse the discussed pre-pack mechanism's international perspective including
UK and USA. Himani Singh (2020)10,
8
David Skeel, The Brookings Economic Studies program, Bankruptcy and the coronavirus (2020)
9
Rehmat Ali, “International Insolvency Regimes and Rescue Measures Particularly with Reference to
the USA and the UK”, Journal of Law & Social Studies (JLSS) (2020)
10
Himani Singh, “Pre-packaged Insolvency in India: Lessons from USA and UK”, New York
University School of Law (2020)
in her research paper examines the essential highlights of Indian insolvency structure
and how Pre-packs will admission within the showcase given the current administrative
regime. The paper investigations the corporate insolvency resolution process in India
and it highlights particular challenges to presentation of pre-packs and presents all-
encompassing diagram of the benefits as well as impediments that Pre-packs would
bring together with them. However, this research paper does not discuss and explains
the provisions and why should pre-pack be preferred over CIRP. She noted that “Pre-
packaged bankruptcy, commonly referred to as pre-packs finds its roots in United States
and United Kingdom; but is yet to be formally integrated in the Indian bankruptcy
regime. While the latest Insolvency and Bankruptcy Code, 2016 has been helpful in
improving the stressed asset statistics, the statute is still undergoing teething troubles
and has scope for bringing in many improvements such as introducing Pre-packs.”
Pre- packaging permits a bothered company to arrange a arrange with its lenders and a
buyer some time recently entering formal indebtedness procedures. By permitting the
terms of a arrange to be arranged some time recently formal procedures, pre-packs
give a speedy and tactful way of completing the IRP. This view was supported by
Vishakha Raj (2020)11 and she also stated that “the speed and confidentiality offered by
pre-packs have made them prevalent in the United Kingdom and the United States,
however, these advantages come with trade-offs. Creditors' voting rights under the
regular insolvency resolution process are circumvented by the pre-pack process. “In
India, pre-packs have not evolved through the present regime as it does not allow for the
assets of a debtor to be sold without its creditors' approval. The Insolvency and
Bankruptcy Board of India is considering introducing pre-packs in the Indian regime
and faces unique challenges because of some of the features in India's insolvency
regime. Insolvency law in India prohibits the participation of a company's directors
and creditors in the pre-pack process. Indian insolvency law also has broad
avoidance provisions which can complicate the implementation of pre-packs.”
Author also studied sub-committee report of IBBI on pre-package insolvency
resolution process presented12 in 2020 and it helped in understanding the Indian
PPIRP which was then to be introduced and now imbibed under IBC,2016 as pre-
pack for MSMEs.
11
M. P. Ram Mohan and Vishakha Raj, “Pre-packs in the Indian Insolvency Regime”, Indian Institute
of Management Ahmedabad (2020)
12
IBBI, Pre-Package Insolvency Resolution Process Sub-Committee Report, 2020
“In Singapore the government decided to develop Singapore into an international centre
for debt restructuring as part of its strategy to export its services and for this purpose
embarked on an ambitious project to reform both its domestic and cross border
insolvency laws. The hybrid scheme was created by injecting some US bankruptcy law
elements into the ‘English' scheme of arrangement” and this recent development related
to pre-pack, covid situation and insolvency regime in Singapore is expressed by
Meng Seng Wee (2021) in the paper he co-authored. 13 Talking about modern
corporate insolvency regime light is thrown by Vijay Kumar (2021)14, “the regime
witnesses a change from ‘debtor-in-possession' to ‘creditor-in-possession', clarity on
the concept of ‘default', concept of financial creditor, and a predictable framework of
timely, efficient and fair resolution is the hallmark of the modern regime.” This
debtor – in – possession is initially pre-packaged insolvency regime only. Finally, for
completion of the research author studied the provisions under Insolvency and
Bankruptcy Code, 2016 and recently implemented pre-packaged insolvency resolution
process for MSMEs under Insolvency and Bankruptcy (Amendment) Ordinance, 2021.
13
Meng Seng Wee and Hans Tjio, “Singapore as International Debt Restructuring Centre: Aspiration
and Challenges”, NUS Law Working Paper No. 4 (2021)
14
Vijay Kumar Singh, “Modern Corporate Insolvency Regime in India: A Review”,
School of Law UPES (2021)
1.6. CHAPTERIZATION
CHAPTER 1 - INTRODUCTION AND RESEARCH METHODOLOGY
This chapter will include the basic introduction to the research problem that India is
planning to introduce pre-packaged insolvency resolution process to protect the interest
of CD in a rapid manner but the main issues arises that this resolution process is a hassle
or will become exemplary model of insolvency resolution in the country after replacing
CIRP. It lays down the hypothesis of the dissertation with its objectives and mode of
methodology that includes doctrinal form of research, scope and limitations of the
research and literature review containing abstracts of the papers which were studied
to provide a base for the completion of the dissertation.
CHAPTER 2 – PROVISIONS OF CORPORATE INSOLVENCY RESOLUTION

PROCESS
This chapter will give brief introduction to Insolvency Bankruptcy Code ,2016 and then
provisions of corporate insolvency resolution process in the code will also be discussed
which was earlier used for liquidation and other methods or schemes of the
resolution will be pointed out.
CHAPTER 3 – PROVISIONS OF PRE-PACKAGED INSOLVENCY

RESOLUTION PROCESS
This chapter will help for understanding pre-pack and its framework. It will
introduce what PPIRP is exactly giving a background, rationale behind introducing it.
It will also include the significance of PPIRP describing about what was actual need
of pre- packaged insolvency resolution process and why it is recommended to be
introduced by ILC. This chapter will identify reasons for such recommendations. It
will state the provisions of discussing in what aspects it will be beneficial for the market
and in what way it will be helpful for courts and subjects of company law. It will also
discuss newly introduced pre-pack in MSMEs through IBC (Amendment) Ordinance
2016 and compare PPIRP and CIRP.
CHAPTER 4 – PRE-PACK INSOLVENCY RESOLUTION PROCESS:
INTERNATIONAL PRESPECTIVE
PPIRP is not a new or unique concept in India and it was already introduced in
western world before since last past decades. This chapter will point out about the
pre-pack offers in the western countries such as USA, UK, Singapore, South Korea
etc and its impact on those countries. It will also specify what things India can gain
as a lesson from these countries while developing its pre-packaged insolvency process.
Whereas it will also discuss expedite reorganization proceedings under UNCITRAL
guide of insolvency law and recent commentary of Working group V on insolvency
law.
CHAPTER 5 – CONCLUSION AND SUGGESTIONS
This chapter will finally conclude the whole research and also suggest the
recommendations and solutions with regards to pre pack offer and its implementation
in India and also will bind the research problem in a systematic manner and in a
proper manner. This chapter will conclude dissertation fulfilling the objectives of
research mention result of testing the veracity of the hypothesis that pre-packaged
insolvency resolution process under IBC(Amendment) Ordinance, 2021 is efficient
in essence of speed, time, cost effectiveness and lessening burden on courts.
CHAPTER II - PROVISIONS OF CORPORATE
INSOLVENCY RESOLUTION PROCESS
Before discussing the provisions of pre-pack resolution process, it is necessary to

discuss the basic background and pre-existing scenario before recent development. This
chapter will deal with basic background of insolvency regime, different mode of
insolvency procedure formal and informal, current status of insolvency resolution
proceedings, then will discusses the provisions of CIRP in detail.
2.1. BACKGROUND
Joey Adams quoted that “Bankruptcy is a legal proceeding in which you put your
money in your pants pockets and give your coats to your creditors.” That's where the
real issue arises when the process goes out of the hand and disregarding the interest
of the creditors. One more truth is that when you are running a business it's more of
like sitting in the boat which can either sail or drown. So that sailing amounts to
earning of profits while doing the business meanwhile drowning signifies the losses
occurred in the business and sometimes that drowning results in the liquidation of the
company. Therefore, it is duty of every nation to introduce proper process for the
liquidation. The whole world after facing COVID-19 pandemic fiasco saw dip in their
economy which was certainly higher in developing countries like ours. It became
priority of the central government to manage the financial condition of the countries
and to establish a standard economic condition and protecting the country from
undergoing economic recession government is taking necessary steps in the forms of
economic reforms. Many companies are established in India due to high skill and factors
supporting ease of doing business and keeping that in mind country is also enhancing
its insolvency regime to easily tackle the risks of doing business. “The evidence of
the same can be seen in the World Bank Group's ease of doing business report on "
resolving insolvency” where India raised its rank to 5215 from 13616 in last 3 years.
Not only this India also showed improvement on scale under Innovation index and
ranked 4717 last year which was a
15
World Bank Group – Ease of Doing Business Report 2020 Related to Resolving Insolvency
16
World Bank Group – Ease of Doing Business Report 2017 Related to Resolving Insolvency
17
World Intellectual Property Organisation, Global Innovation Index Report 2020 Related to Ease of
Resolving Insolvency
lot better than its rank in 201718 when it comes to Ease of Resolving Insolvency
Report.” The Government is keen to enrich its rank on these two indices by
reforming insolvency regime for better protection of credit debtors. Today's
globalized world is one with multinational companies and due to this particular reason,
the corporate world is filled with competition and if any company fails to compete
with other it results in failure of that company. A company may fail due to its
inefficient management which is not viable while competing in the market or a co.
might be a victim of the pandemic situation which is so bad that it can bring viable
business to closure. But this closure is totally against the persons having stakes in the
co. as the shareholders, creditors or even employees and will eventually lead to adverse
effect on economy too. It is ardent need to pay attention towards these stakeholders
in time of financial stress to resolve and protect their interest which will also attract
stakeholders to invest and take stake within the co. s either domestic or foreign while
doing business.
2.2.1. INSOLVENCY REGIME

The Insolvency and Bankruptcy Code (IBC), 201619 was introduced for the
consolidation of plethora of legislation covering insolvency resolution and realisation
of assets, which dictated the insolvency regime in a tedious and haphazard manner.
Having too much judicial involvement and multiplicity of legal proceeding is
inimical to the interest of creditors with regards to their statutory right and serious
burden with respect Non-Performing Assets. So main purpose of this act was to set
process of liquidation in motion in swift manner and providing a proper framework
for the same. It is safe to say that the IBC, 2016 20 and the regime successfully turned
around the status of insolvency and liquidation proceedings in India. With the
introduction to IBC,201621 also brings new age of insolvency regime with its dynamic,
reasonable, influencing need of customers, limited by duration in India. This code not
only brought reforms but also became a ray of hope for the credit debtors. But one
thing is also there a proper implementation is also needed. The law paved a way for
the better infrastructure, enhance and manage the business capabilities and
modernization in the market. It's also
World Intellectual Property Organisation, Global Innovation Index Report 2017 Related to Ease of
18
Resolving Insolvency (Rank 111)

19
20 Id
21
Id
beneficial for shareholders. The reason of success of the code22 is the way attention
by BLRC is paid while resolving issues regarding bankruptcy and insolvency were
with purview of domestic companies with its foreseeable refined alternatives
according to the market surroundings. This was considered as first-hand issue which
was primarily established unless insolvency and bankruptcy evolved to a level that
domestic issue resolvent became up to satisfaction. After that next target was
tackling the cross- border23 co. s and issues are involved. Meanwhile even step to
introduced pre-packaged insolvency regime is also taken after affirming the already
strengthened and completely developed that it can work without meddling of judiciary
i.e., NCLT but initially rules will be under supervised scheme arrangement of NCLT
not without dialogue with the persons having stake in the co. to be liquidated24. Pre-
pack is much required and well- known part of insolvency in other countries too. Pre-
pack is a natural step in the evolution of insolvency regimes. 25 Any law with regards
to the money matter or business need to be experimental and empirical26 in its nature.
As the society keeps on change and so, the mindset and financial status of the
country according to which corporate law is developed. So, one thing is for sure that
IBC27 being economical and depending upon the financial status and social strata for
deciding factors of the liquidation of the companies. In a sense we can say that it's not
got to be a straight road of concrete, there will be some pits which need to be filled by
the government and that will lead to evolution of IBC28 to strengthen it according to
the need of the society. A 94% cut was provided to the financial creditors under the
first resolution plan which was approved by the Code29 while the promoters seized
control of the company.30 Although, this was not deemed acceptable as it was
considered rewarding deceitful and fraudulent people at the cost of creditors. An
ordinance31 was passed to rectify the error and restricted persons with nominal
disqualifications from submission of resolution plans in the case of liquidation of co.
through CIRP to guarantee to assist in resolving
22
Supra note 19 at 12
23
BLRC, The Report of the Bankruptcy Law Reforms Committee, November 2015
24
BLRC, The Report of the Bankruptcy Law Reforms Committee, February 2015
25
M. P. Ram Mohan & Vishakha Raj, 'Pre-packs in the Indian Insolvency Regime', IIMA Working
Paper (2020)
26
Swiss Ribbons Pvt. Ltd. v. Union of India (2019) 4 SCC 17
27
Supra note 19 at 12
28
Ibid
29
Ibid
30
IBBI, Annual Report 2017-2018 (2018)
31
The Insolvency and Bankruptcy Code (Amendment) Ordinance, 2017
the distress. As a predecessor to the PPIRP, CIRP which had the 90% approval of voting
share of CoC32 was enabled by the Code in coming changes. So far, there has been five
legislative intrusions in the Code 33. We can perceive the eagerness of the government
to keep enhancing and polishing the resolution framework as four of the said five
interventions were by way of Ordinances in view of urgencies. All these amendments
helped to intensify the liquidation process to corroborate it with new competitive
markets to fortify the main objective behind the introduction of the Code which is
betterment of the companies. Not only this the courts are now also paying attention
to financial choices while deciding the case.34 The main factor which is considered
while resolving the insolvency in corporate sector after introduction of this code is the
public interest at large35. It only meddles when a company is having very hard time
and is up to the level of the liquidation. This code becomes a stick for the CD to stand
again and return on its feet relieving their stress. Therefore, its objectives can be
pointed out as restructuration of the CDs36, enhancing the assets of the co.,
encouraging the entrepreneurship and creating a balance and maintaining
relationships between the co. and the stakeholders of the co. and these objectives are
totally inalienable37. Suppose RA who is in situation to manage the CD 38 during
ongoing stress then every possible work is done to revive the same and make it work.
Even if any order is passed with regards to the liquidation law also provide a chance
to vend CD39. So, that CD can resuscitate and be safe from its death due to liquidation
from hands of its management.40 Whereas the whole process is limited by the time as
delay which is not required will certainly depreciate the value of the co. Once the
corporate institution is not sound in money matters that extends insecurity with
regards to its ownership and control which may cut-offs the scope of the resolution
whereas speed and time is essence of IRP therefore everything is time bound41 and it
is compulsion that CIRP must be finished
32
33
Supra note 19 at 12
34
Committee of Creditors of Essar Steel India Limited (through authorized signatory) v. Satish Kumar
Gupta, (2020) 8 SCC 531
35
Kridhan Infrastructure Pvt. Ltd. v. Venkatesan Sankaranarayan, AIR 2020 SC 3299
36
Supra note 26 at 13
37
Binani Industries Ltd. v. Bank of Baroda (2018) NCLAT 521
38
ArcelorMittal India Private Limited v. Satish Kumar Gupta, AIR 2019 SC 9405
39
The Insolvency and Bankruptcy Board of India (Liquidation Process) Regulations, 2016, Regulation
32
40
Supra note 26 at 13
41
Mobilox Innovations Pvt Ltd v. Kirusa Software Pvt Ltd. AIR 2017 SC 4532
within 180 days and only can be extended up to 90 days 42 with reasonable reason
provided. A perfect schedule is set up under the regulations for assigned task and hence
should be followed accordingly and in a strict manner. 43 Whole sole purpose of the
situation of the code is relieving CD from ongoing stress. It has an obligation on IP
to scuttle CD as due to stress restricts the deferral & dissolution of the important and
essential services, approval of continuing license, permits or grants, injunction on
carrying on claims by the individuals, allows elevating temporary finances for working
of CD, enclose RA from misconduct of CD under old management. It gives authority
to the stakeholders in business choices. It provides fair and competitive market activity
to search for individual to save the CD and resolve in most apt circumstances. Even the
legislative intervention has main objective to avert the threat on life of CD at the time
of peril and guarantee more sustained life after liberating CD at the time of peril and
guarantee a more sustained life after liberating CD from stress and apparently, the
recent amendment limits the use of CIRP during pandemic situation to synchronise it
with main target of the code.44
2.1.2. RELATIONSHIP AMONG MAIN STAKE HOLDERS OF THE

COMPANY
The primary stakeholders in the co. are either the shareholders or creditors as per
BLRC45. The power of the shareholder to run the business and having complete control
once debt is
maintained while creditor have been devoid to interfere in the activities of the co. in
course of business. The management of the co. only comes into the hands of
creditors if debt is not maintained and when comes to resolution of insolvency.
Meanwhile even this was not allowed in prior code and had to wait for a until cow
comes home before taking any action after realization of the debt46. However, this
code was as introduced to strike a balance between the co. 's stakeholders when it
comes to their rights and interests with regards to the co. Whereas this model shift in
law was also seen in the decision of the court when the very first matter was
resolved through this and it was
42
Surendra Trading Company v. Juggilal Kamlapat Jute Mills Company Ltd AIR 2017 SC 8400
43
Supra note 38 at 14
44
45
Supra note 26 at 13
46
Shri Arun Jaitley, Union Minister of Finance and Corporate Affairs (2019) at the Conference on
'Insolvency and Bankruptcy: Changing Paradigm' at Mumbai on August 19,
https://ibbi.gov.in/uploads/resources/19Aug2017speechFM.pdf (Last visited on 9/7/21)
held that if a management is not in position to pay their debts, then even such well-
established management needs to step back from its position. 47 Many corporations
especially the giant ones emerged as per IBC,201648 and this strain of IBC
reconceptualized the relationship between creditor and the debtor. The defaulter now
no longer able to cope up with stress49 and devoid of that stress at the initial stages, they
try their optimum to ignore the result of CIRP & avoid impending stress right before
application is filed for initiation of CIRP when notice for repayment is received even if
after such filing but before such application is admitted. However, 14,510 CDs
application before stage of admission & after closing resolution process 50 of 218 CDs
through CIRP under sec 12A51 of code is ultimate proof of same 52. Sometimes, process
of CIRP is terminated by AA 53 or when settlement is done with the help of the
mediator54 or some with the help of SC55 and such well settled resolutions are quick
in nature and so is revival of CDs when done peaceful manner. It also maintains the
transparency in relationship between debtors and the creditors which balance their
equation at large through the code and also started to deal with out of court
settlements.56 Even if the situation demands these resolution processes are best test
all over the world and also helps in evolution of insolvency regime.
2.1.3. INSOLVENCY RESOLUTION AND COVID PANDEMIC SITUATION

As all of us already familiar that 2020 and 2021 are years of pandemic and whole world
is clutched under roots of COVID-19 and almost all over the sphere was confined due
to lockdown for extremely extended period of time which somehow paused all the
economic and financial occupations until the May 2020 ended. Now, slowly all the
economic activities are coming back to their place and comparing the situation
which
47
M/s. Innoventive Industries Ltd. Vs. ICICI Bank (2018) 1 SCC 407
48
Supra note 19 at 12
49
Supra note 24 at 13
50
Smt. Nirmala Sitharaman, Union Minister of Finance and Corporate Affairs (2020) in Rajya Sabha
on September 9, http://164.100.47.5/newsynopsis1/englishsessionno/252/Synopsis%20_E_%20dated
%2019.09.pdf (Last visited on 9/7/21)
51
The Insolvency and Bankruptcy Code (Act No. 31 OF 2016), s.12A
52
IBBI, Insolvency and Bankruptcy News, April-June (2020)
53
Manoj Kumar Das Vs. Horizon Dwelling Pvt Ltd, (2020) Co. App. (AT) 567
54
Parvinder Singh Vs. Intec Capital Ltd., (2019) Co. App. (AT) 968
55
Lokhandwala Kataria Construction Private Ltd Vs. Nisus Finance and Investment Managers LLP
AIR 2017 SC 9279
56
Oitihjya Sen, Shreya Prakash and Debanshu Mukherjee (2020), Designing a Framework for Pre-
Packaged Insolvency Resolution in India Some Ideas for Reform, https://vidhilegalpolicy.in/wp-
content/uploads/2020/02/Report-on-Pre-Packaged-Insolvency-Resolution.pdf (Last visited on 9/7/21)
exists today is not any less tha era when the world faced the great depression in 1930s. 57
According to IMF report, 4.4 percent global economy was projected in 2020 58. So,
impacted was the corporate sector and insolvencies also shooted upward all over the
world due to static financial status. The rate of liquidation escalated by 40 percent in
US than economic crisis of 2008. 59 Many big and small businesses suffered due to
pandemic. Even in UK around 64 percent co. s were under crisis and verge of being
declared insolvent in the month of September60. At international level it was
predicted that around 26 percent surge will be seen in cases of insolvency in
corporate sector during 202061.India's condition in the aspect of corporate world is also
degraded due to the pandemic situation. Different financial institutions calculated and
projected the economy of India during ongoing pandemic such as 10.3 percent by
IMF62 , 9 percent by ADB63 and 9.6 percent by World Bank 64 for assessment year
2020-21 which very well can reflect declining economic condition of our country
However the Indian reports suggested the during the Q1 of FY 2020-2021 the GDP
was displayed as 23.9 percent65 with growth of 5.2 percent as compared to previous
FY while in reality it shrunk by 9.5 percent in Q1 , 9.8 percent in Q2 , 5.6 percent in Q3
and final contracted to 0.5 percent during Q466. Gross NPA ratio of all SCBs was
projected to soar up to 8.5 percent from March, 2020 to 12.5 percent by March, 2021
through macro stress test using the baseline scenario which at worst can rise up to 14.7
percent if severity of risk and stress becomes more. Risk Weighted Assets Ratio also
dropped from to 13.3 percent in March, 2021 and under situation of high stress went
down to 11.8 percent67. Even Business Assessment Index for Q1 of assessment year
2020-21 hit its lowest in history
57
UNCTAD, Trade and Development Report 2020 related to “From Global Pandemic to Prosperity for
All: Avoiding Another Lost Decade”
58
International Monetary Fund, World Economic Outlook, October 2020: A Long and Difficult Ascent
59
Theo Smid & Lulian Ciobica , “2020 insolvencies forecast to jump due to Covid-19” , Atradius
Collection , 1st September 2020, https://group.atradius.com/publications/economic-research/2020-
insolvencies-forecast-to-jump-due-to-covid-19.html (Last visited on 9/7/21)
60
Office for National Statistics, UK (2020), Coronavirus (COVID-19) Review: data and analysis,
March to October 2020
61
Supra note 59 at 17
62
Supra note 58 at 16
63
Asian Development Bank (2020), Asian Development Outlook (ADO) 2020 Update, September 2020
64
World Bank, Half Yearly South Asia Economic Focus 2020 Update, October 2020
65
Ministry of Statistics & Programme Implementation (2020), Press Release, 13 August 2020,
http://mospi.nic.in/sites/default/files/press_release/CPI%20Press%20Release%20August%202020.pdf
(Last visited on 9/7/21)
66
RBI, Monetary Policy Report, 9 October 2020
67
RBI, Financial Stability Report, July 2020
of survey. Same was the situation with MPM Index which reduced from 47.2 percent
to 46 percent in a month 68. After going through great depression like situation IMF 69
and world bank70 initially suggested 3 phase approaches to jump back from the slump
and these phases are taking measure to pause insolvency and debt enforcement then
in second phase move towards out of court settlements and finally third phase will be
introducing latest tools of resolution and supporting the economy. Governments have
reacted with measures such as ban on credit repayments, sector particular patience,
mixture of liquidity into the managing an account framework to supply credit to
financially troubled firms, alleviation in resource classification keeping money
standards, adaptability in director's obligations to start indebtedness continuing,
alleviation from compliance with particular legal obligations, etc. A few of them are
investigating pre-pack in expectation of expanded utilize of pre-pack deals to protect
reasonable businesses and spare employments at this hour71. The Government of
India has also taken a few measures to enhance the torments exuding from COVID-
19. It expanded the threshold of default for recording of bankruptcy application from
Rs. 1 lakh to Rs. 1 crore to prevent MSMEs from being pushed into bankruptcy
proceedings allowed loaning teach to amplify the ban on term loan portions by six
months and time for determination within 180 days. CIRP requires an RA to protect a
falling flat company through a determination arrange. When each company, each
industry and each economy is reeling beneath stretch, the probability of finding an RA to
protect a coming up short company is farther. In case all falling flat companies were
to experience insolvency proceeding, most of them may conclusion up with
liquidation for need of guardian angels to protect them. Upon such liquidation, the
companies would have a untimely passing, whereas the resources would have
distress deal, figuring it out horrifyingly small for lenders. This not one or the other
settle the push nor maximises
68
RBI, Press Release, 6 August 2020, https://www.rbi.org.in/Scripts/BS_PressReleaseDisplay.aspx?
prid=50174(Last visited on 9/7/21)
69
Yan Liu, José Garrido, and Chanda DeLong (2020), “Private Debt Resolution Measures in the Wake
of the Pandemic”, IMF Special Series No. COVID-19, 27 May 2020,
https://www.imf.org/~/media/Files/Publications/covid19-special-notes/en-special-series-on-covid-19-
private-debt-resolution-measures-in-the-wake-of-the-pandemic.ashx (Last visited on 9/7/21)
70
Antonia Menezes and Sergio Muro (2020), “COVID-19 Outbreak: Implications on Corporate and
Individual Insolvency”, Equitable Growth, Finance and Institutions, COVID-19 Notes, Finance Series,
World Bank Group, 13 April 2020, https://pubdocs.worldbank.org/en/912121588018942884/COVID-
19-Outbreak-Implications-on-Corporate-and-Individual-Insolvency.pdf (Last visited on 9/7/21)
71
Mathew Ditchburn (2020), “The Sun Also Rises on Pre-pack Administration Reform”, 8 October
2020, https://www.engage.hoganlovells.com/knowledgeservices/news/the-sun-also-rises-on-pre-pack-
administration-reform(Last visited on 9/7/21)
the esteem of resources and, thus isn't steady with the destinations of the Code. Another
course is decoded for rectification to suspend recording of applications for start of CIRP
in regard of defaults emerging amid COVID-19 period, which is six months
commencing on 25th March 2020 to begin with, but can be amplified up to a year, if
justified72. This period has been amplified till 24th December 2020 73 but commits a
default amid the COVID-19 period, from being pushed into bankruptcy continuing.
This, in any case, took absent compelling alternative for determination in regard of
COVID-19 obligation. The availability of RAs will proceed to be a concern for very
a few times, especially when there's no clarity as to when COVID-19 will die down
and indeed after that the commerce and economy would take significant time to
recuperate. At the same time, CIRP may not abdicate an alluring result even for non-
COVID-19 defaults for need of RAs. It is vital to supply compelling dispensation, which
empowers the partners to discover a determination amid COVID-19 period and even
on the other side of COVID-19. Pre-pack is being recommended as a valuable
agreement in times of COVID-19.74
2.1.4. RESOLUTION PROCESS

A company in stretch frequently settle stretch on its claim by progressing its
competitiveness at marketplace. It may not, be that as it may, succeed continuously.
It may sit over a table with its stakeholders, either exclusively or collectively, to work
out a arrange to resolve push. It may resort to a formal framework which gives a
guided way for determination and characterizes the part of partners in the system for
determination of push. There are two court directed statutory choices, namely, (a) CIRP
beneath the Code, and (b) scheme of compromise or course of action (SoA) beneath the
Companies Act, 2013, and two out-of-court choices, to be specific, (a) the RBI's
prudential framework for determination of focused resources and (b) casual
understanding between an indebted person and creditor, with /without offer
assistance of a go between. A bank has gotten to these alternatives to resolve stretch of
its debtors, in expansion to a few choices for recuperation of its credits.
72
The Insolvency and Bankruptcy Code (Amendment) Ordinance, 2020, which has since been
regularised by the Insolvency and Bankruptcy Code (Second Amendment) Act (Act No. 17 of 2020)
73
MCA, Notification No. S.O. 3265(E), 24 September 2020
https://www.ibbi.gov.in/uploads/legalframwork/2987e1e33d62d2e1781c700ee16baa36.pdf
74
Aparna Ravi (2020), 'Introducing Pre-packs in India - A Useful Tool in Times of COVID-19?',
Oxford Business Law Blog, 25 May 2020
2.1.4.1. SCHEMES UNDER CO. ACT 2013
Section 230 of the Companies Act 2013 introduces SoA that allows companies to
restructure their debt or capital structure to turn their businesses around, with consent
from NCLT. It has its roots in English law, but in India it evolved through the Indian
Companies Act, 188275, the Indian Companies Act, 1913 76, the Companies Act, 195677
and finally the Act78. The court has a very broad interpretation of the terms
"compromise" and "reconciliation" to cover a wide range of transactions related to
the nature of finances and restructuring. SoA is a judicial framework in which a
company, creditor, member or liquidator claims before the NCLT makes a
compromise or agreement between the company –
(i) the creditor or corporation their bodies (ii) Members or their classes.
In response to such a request, the NCLT may request a meeting of creditors or
groups of creditors, or in some cases members or groups of members. If these
creditors or groups of creditors with a value of at least 90% are confirmed by the
SoA with a notorious certificate, they may be exempt from the creditor meeting or
creditor category. Notice of appeal will be sent to all creditors and shareholders along
with data of the SoA proposal, in addition to publication on the company's website
and in newspapers. Notice may be affected by central government, tax authorities,
their respective stock exchanges, SEBI, Competition Commission of India and SoA,
if necessary and must be declared within 30 days' time limit, if any. It will also be sent
to a number of other regulatory bodies. As of the date of contact, it is estimated that
they have not commented on the SoA proposal under penalty. SoA objections may
only be pursued by qualified persons who own at least 10% of the shares or at least 5%
of their total outstanding balance. If the SoA is approved by three-quarters of the
value of the Creditor or Group of Creditors, or the Member or Group of Members, and in
some cases and also the NCLT, then the SoA is the Company, all claims indemnify.
case, type of creditor, shareholder or shareholder class, and liquidator of the company
and taxpayers. In addition, NCLT may make changes to the SoA to properly execute
the program during or at any time thereafter. If you decide that the sanctions system is
being applied
75
Indian Companies Act, 1882(Act No. 6 of 1882)
76
The Indian Companies Act, 1913 (Act No. 7 of 1913)
77
The Companies Act, 1956(Act No.1 of 1956)
78
The Companies Act, 2013(ACT NO. 18 OF 2013)
incorrectly, you can order the dissolution of the company. SoA has several advantages,
such as wider reach, pre-fault preload response, less business disruption, stuffing and
binding effects, but it is not actually collected. Some of the reasons for this are:
(a) The lack of a period of calm, such as the moratorium in the case of the CIRP, often
leads to prompt follow-up of proceedings, litigants' procedures, and remedial action.
execution against the company in court;
(b) SoA requires the approval of 3/4th members of the creditor. This may be binding
against the 66% vote threshold of creditors based on the code.
(c) SoA, unlike CIRP, binds a company, all creditors or types of creditors, members or
groups of members
(d) There is no time limit for the process to complete and can be abused, especially
because it is based on the debtor's property model. A total of 1,099 applications
including debt restructuring and merger and consolidation applications, were filed in
2018 79under section 230 of the Companies Act 201380.
2.1.4.2. RBI PRUDENTIAL

The RBI provides a prudent framework for early recognition, reporting and long-
term resolution of stressful activities.81 This framework applies to entities such as banks
and non-banking financial institutions (NBFCs) regulated by the RBI. Lenders must
implement Board approved policies for the resolution of impaired assets, including a
resolution period. If one of the borrower's defaults, the lender must conduct a review
of the borrower's account to determine a resolution strategy that includes the nature
of the resolution plan for the period. From this hole. Lenders can also choose to
initiate legal proceedings in the event of bankruptcy or recovery. Once the settlement
plan is implemented, the framework requires the lender to sign an ICA during the
review period. For large accounts with a total difference between tenant and lender of
over Rs 1500, the payment plan must be made within 987 days after the end of the
review period. If a settlement plan valid for the borrower is not implemented within the
allotted time, the lender must make an additional allowance of as total amount
outstanding
79
MCA (2019), Annual Report for 2018- 19 https://www.mca.gov.in/bin/dms/getdocument?
mds=1aK9OqxLrDeYkCY7WlYP4g%253D%253D&t ype=open, (Last visited on 14/7/21)
80
Supra note 78 at 20
81
RBI (2019), RBI/2018-19/203 DBR.No.BP.BC.45/21.04.048/2018-19, June 7,
https://www.rbi.org.in/Scripts/NotificationUser.aspx?Id=11580 , (Last visited on 14/7/21)
percentage. However, when looking for a solution in the code, the framework offers
several incentives. It states that half of the additional provisions will be removed
upon filing for bankruptcy and the rest removed upon the approval of the CIRP. It
also encourages lenders to offer temporary loans to DCs under CIRP and allows these
loans to be treated as “standard assets” for the duration of the CIRP.
However, the safeguard framework has some challenges, including:
(A) The available framework addresses tensions by creditors regulated by the RBI.
(B) Framework relies on ICA that lender decisions representing 75% of the value of
unpaid credit lines and60% of lenders by volume are binding on all lenders. It is
stipulated. This is very difficult to achieve, especially from insurers, mutual
organizations, debtor creditors, real estate trustees, foreign creditors and other creditors
outside the territory of the RBI. These creditors can call formal bankruptcy proceedings
under Code to endanger secure transactions. (C) In addition to, the Framework does not
provide rest in the form of proceedings, proceedings, and corrective actions against CD
during restructuring.
(D) Plan is binding only on the FC, which is the signatory of ICA. Moreover, it does
not constrain the OCs. This limits the scope of the plan to financial restructuring only
and may not be sufficient to deal with stress. The framework was recently revised82
to provide a special window within the aforementioned health framework for
addressing the stress caused by the pandemic without changing ownership. Lenders
are expected to implement plans to address qualified and stressed borrowers from the
COVID19 account and classify their exposures without changing ownership. This
violates the standard that the settlement plan provides for a concession to a borrower
requiring a downgraded asset classification, except with a change of ownership. This
framework applies to both personal loans and corporate debt for businesses, only
accounts are classified as standard accounts and lenders have not defaulted for more
than 30 days as of March 1, 2020 (i.e., not above SMA0). The payment process is
eligible. The settlement process is carried out according to an agreement between the
borrower and lender in the case of a single credit institution, and between the
borrower and credit institution, which accounts for 75% of the amount and 60% of the
quantity. If you have multiple lenders. Resolution in this context must be invoked before
December 31, 2020
82
RBI (2020), RBI/2020-21/16 DOR.No.BP. BC/3/21.04.048/2020-21 dated August6
https://rbidocs.rbi.org.in/rdocs/notification/PDFs/NT20097D966B84C34C0CA1B6D2E0A62B5BFD.P
DF , (Last visited on 14/7/21)
in the case of a business loan and must be invoked within 180 days from the date of
invocation. In the case of involving multiple credit institutions where the resolution
process was called, all credit agencies had to sign the ICA within 30 days. If desired,
a lender other than can sign the ICA. If the credit institution representing the
minimum threshold cannot sign ICA, the process terminates and cannot be called
within the framework. Framework also encourages lenders to sign the ICA, provides
various rules in the Addendum clause, and removes the provisions of parties who do
not sign the ICA. In particular, the Framework requires the establishment of an
expert committee by the RBI to develop recommendations on financial parameters
that should be included in a payment plan, of which are industry-specific references
to this parameter a period. The panel of experts will also have to confirm the process
of the settlement plan implemented in this context without going into the commercial
aspect. RBI has also expanded83 its existing one-time restructuring program beyond its
existing loans to SMEs that are classified as "standard". Total exposure to banks and
NBFCs did not exceed Rs 25 crore as of 1 March 2021 providing for SMEs, which
was the standard asset at the time. Benefits of the Asset Classification to maintain the
borrower's account classification according to the standard and upgrade to the
standard classification over the accounts classified into the NPA category for the period
from day 2 March 2020 to the Offer date. The restructuring is expected to take place on
March 31, 2021. However, it is too early to see the results of the resolution framework
introduced in 6 August 2020.
2.1.4.3. INFORMAL OPTIONS

Debtors and creditors can deal with stress outside the formal framework, with or
without bankruptcies. They can sit around the table and come up with a solution that
meet requirements, with or without the help of a middleman. Since the implementation
of the standard, there are preferences for dealing with stress without the need for a
formal framework. As mentioned earlier, 14,510 applications submitted to the NCLT
to initiate CIRP were withdrawn 84during the pre- approval period, indicating that the
83
Supra 82 at 22
84
Smt. Nirmala Sitharaman, Union Minister of Finance and Corporate Affairs (2020) in Rajya Sabha
on September 19, http://164.100.47.5/newsynopsis1/Englishsessionno/252/Synopsis
%20_E_%20dated%2019.09.pdf , (Last visited on 14/7/21)
stakeholders had reached a resolution. However, such informal resolutions make it
difficult for stakeholders to go down the path without guidance, without a ban, the
resolutions they reach do not benefit from the sanctity of public resolution. It is not
popular because of the gain under formal framework agreement, etc.
2.1.4.4. CORPORATE INSOLVENCY RESOLUTION PROCESS

A limit sum of pretermits allows a partner to actuate CIRP of the CD and if initiated,
the CD goes absent from “debtor-in-possession to ‘creditor-in-control” and
management of indebted person & its resources comes under hand of an IP. CD is
now running as per IP through ongoing concern. He constitutes a “CoC” to require
entity business choices in regard of the CD. He welcomes attainable and viable
resolution plans from qualified and valid RAs for determination of bankruptcy of the
CD. A “resolution plan” conceives boundless conceivable outcomes of determination
and may involve “variation in management, innovation, or item portfolio; procurement
or transfer of resources, businesses or undertakings; rebuilding of association,
commerce demonstrates, possession, adjust sheet; strategy of turn-around, buy-out,
securing, takeover; and so on”. On the off chance that the CoC endorses a
“determination plan within the stipulated time with 66% voting share”, the CD proceeds
as a going concern. On the off chance that the CoC does not endorse a resolution
plan with the desired voting share mind the CD mandatorily experiences liquidation.
A determination affirmed by the AA is official on all “stakeholders, counting Central
Government, State Governments, and any nearby specialist to whom the CD owes
obligation within any law”. It appreciates a few benefits like ban, and binding outcome,
and administrative benefits such as, exclusion from open offer beneath takeover
Code, set off of brought forward misfortune against book benefits for the reason of
Least Interchange Assess, etc.
2.2. REGULATION OF CORPORATE INSOLVENCY RESOLUTION

PROCESS IN INDIA
Corporate Insolvency Resolution Process (CIRP) alludes to bankruptcy procedures
of corporates whereby any corporate indebted person who commits a default would in
this manner permit a financial creditor, an operational creditor, or the corporate
indebted person itself to start corporate indebtedness determination prepare in regard
of such corporate indebted person.
2.2.1. INITIATION OF CIRP PROCEEDINGS
In application for CIRP can be initiated by a financial creditor under “section 7 85, by an
operational creditor under Section 8 86 and 987 or by the corporate debtor itself under
Section 10”88.
2.2.1.1. APPLICATION INITIATED BY FINANCIAL CREDITOR

As per Section 5(7)89 of the Code “financial creditor” implies “any individual to whom
a budgetary obligation is owed and incorporates an individual to whom such obligation
has been legitimately relegated or exchanged.” In less complex terms, Money related
Banks allude to those people from whom cash was borrowed by the corporate indebted
person as an advance or against intrigued beneath any credit offices. E.g. – Banks,
Money related Educate, NBFCs, etc.
Process: –
 FC either by itself or mutually with other financial creditors, or any other individual on
sake of the FC, may record an application for starting CIRP against a corporate indebted
person some time recently the AA (i.e., NCLT) when a default has happened.
 Application for starting CIRP should include:
 Record of the default recorded with the data utility or such other record or prove of
default.
 Name of the RP proposed to act as an interim RP.
 any other data as may be indicated by the Board.
 The AA (i.e., NCLT) should within 14 days either acknowledge or dismiss the
application recorded by the FC.
 On Acknowledgment of Application, the insolvency process will commence from
the date of such acknowledgment and the order should be sent within 7 days to both
FC and CD along with the appointment of a proposed RP.
 On Dismissal of Application, a “notice to the applicant” to amend the deformity in his
application within time limit of 7 days of such notice.
85
The Insolvency and Bankruptcy Code (Act No. 31 OF 2016), s.7
86
87
88
89
The Insolvency and Bankruptcy Code (Act No. 31 OF 2016), s.5(7)
2.2.1.2. APPLICATION INITIATED BY OPERATIONAL CREDITOR
According to Section 5(20)90 of the code “operational creditor” implies an individual
to whom an operational obligation is owed and incorporates any individual to whom
such obligation has been lawfully relegated or exchanged. These banks are those
who are in business with the company or are owed a few obligations in regard
of the merchandise and administrations given by them to the CD. E.g. – Employees,
Suppliers, etc.
Process: –
 On default being happened, OC might send a demand notice to the CD for
reimbursement of the money owed.
 The CD shall within 10 days' time limit of demand notice, either deliver
confirmation of instalment made by it to the lender or grant the presence of dispute
against such sum owed in regard of FC
 In case the OC after 10 days of demand notice does not get any instalment or notice of
dispute from the CD should record an application with AA (i.e., NCLT) for starting
process of CIRP.
 Application for starting CIRP might include:
 A copy of the receipt requesting instalment or demand notice conveyed by the OC to
the CD.
 An affirmation to the impact that there's no notice given by the CD relating to a
debate of the unpaid operational debt.
 A duplicate of the certificate from the budgetary educate keeping up accounts of the
operational creditor confirming that there's no instalment of an unpaid operational debt.
 A duplicate of any record with data utility affirming that there's no instalment of an
unpaid operational obligation by the corporate indebted person, in case available.
 Any other verification as may be endorsed.
 The AA (i.e., NCLT) shall within the time limit of 14 days either acknowledge or
dismiss the application by the OC.
 On Dismissal of Application, a notice to the applicant to correct the deformity in
his application inside 7 days of receipt of such notice is to be given.
90
2.2.1.3. APPLICATION INITIATED BY CORPORATE APPLICANT
Section 5(5)91 pointed out that “corporate applicant” includes-
 CD or any partner or member of CD who has authority to create an application.
 A person who is in charge of overseeing the operations and assets of the CD.
 An individual who has control, and supervise over the budgetary issues of the CD
Process: –
 On the event of default, a corporate applicant may report through CIRP with AA.
 Application for starting CIRP should include:
 The data relating to its books of account and such other reports for such period as may
be specified.
 The data relating to the RP proposed to be designated as an IRP.
 The special resolution passed by shareholders of the CD or the resolution passed by at
least 3/4th of total members of CD for initiating the application
 The AA (i.e., NCLT) shall within time period of 14 days either acknowledge or dismiss
the application initiated by the corporate applicant.
 On Dismissal of Application, a notice to the applicant to amend the mistakes in his
application within time limit of 7 days of receipt of such notice shall be given.
 CIRP will commence from the date when application was admitted by the AA (i.e.,
NCLT).
Figure 1: INITIATION OF CIRP92
91
92
Vinod Kothari, IBC: Ushering in a New Era, Section III: Corporate Insolvency Resolution Process,
https://vinodkothari.com/wp-content/uploads/2019/06/Section-III-CIRP.pdf ,( Last visited on 14/7/21)
2.2.2. APPOINTMENT OF INTERIM RESOLUTION PROFFESIONAL (IRP)
Definition of RP is given under section 27 93 of the code as a licensed IP. Until at that
point, when NCLT appoints the IRP. The moment organize towards the method is for
the Interim Resolution Professional to undertaking between carrying out the remaining
of the insolvency process and guaranteeing that the functioning of CD is a going
concern. When CD is conceded into the CIRP then it suspends the BOD. Moreover, the
management is controlled by an autonomous IPR. From this moment onwards until the
conclusion of the CIRP, the administration has no control over the issues of the co.
2.2.3. MORATORIUM
“Moratorium”, also referred to stoppage or “calm period” is the period amid which
no creditor, at all can undertake recovery actions against the CD. Period of
moratorium starts once the application is accepted by the tribunal and according to
Section 1494 of IBC on declaration of this period, the tribunal restricts;
 Initiation of new suits or continuation of unresolved suits (in terms of monetary
debt) against the CD
 Defenestration of the CD from any management, monetary, lawful or administrative
obligation
 Any extra dispossession or recuperation of obligation against the CD under
the SARFAESI Act, 2002;
 Recovery from the CD of any asset or transfer that he has at the time of the process
of insolvency.
 Authorization of any security interest
 Suspension or discontinuance of the supply of basic goods and services until
moratorium lasts
Period of moratorium remains as it is until the time the CIRP is completed. The
upper constrain of prolongation of this period is 180 days with a conceivable expansion
of 90 days under extraordinary circumstances extending this period 270 days.
93
94
2.2.4. CONSTITUTION OF COMMITTEE OF CREDITORS (COC) AND
CLARIFICATION OF CLAIMS
IRP is capable for classifies the claims made within the application by the solicitor
efficiently, and making an examination of the same as per Section 18 (b) 95 of IBC. In
case the IRP needs an article of a claim made by the applicant; at that point the code
approves the IRP to call a meeting with the applicant with regards to same for the
clarification needed. The IRP in addition to this needed to establish COC under Section
18 (c)96 of IBC within time limit of 30 days of the commencement of the CIRP. Once
the COC is shaped during first meeting, the committee at that point designates an RP.
The IRP can possibly hold the position or a newly chose RP can replace depending
on the choice of the committee. The foremost critical part of the RP while deciding
on Resolution Plans. The RP with aid of BOD or held authorities of the CD
guarantee to complete, all such acts as may be fundamental to keep the CD in a
working stage. IP are one of the 4 pillars which maintain the Code. The Code is
driven by IP. Being the official of the complete structure under code, the part of IP is
significant to guarantee and satisfy of the targets of the Code. Activities taken by the
IRP/ RP are to be approved by this CoC. The Code has laid down diverse edges for
endorsement of distinctive exchanges, viz. significant things like approval of
determination plans, expulsion of RP, require the at least 66% assent, while routine
matters like confirmation of costs etc. requires at least 51% assent. This area moreover
covers certain important perspectives concerning gatherings of the CoC.
2.2.5. RESOLUTION PLAN AND ITS APPROVAL

Once the RP gathers and confirms the claims made by the applicant, the same has
got to be taken after by a public declaration by the COC. The declaration is
characteristic of the insolvency by announcing that the CD is experiencing an
indebtedness prepare and all interested bidders are welcomed to yield a
determination arrange that could potentially be executed. These bidders might be
planned speculators, lenders etc. A resolution arrange for the restoration of the
company must be affirmed inside 180 days from the begin of the CIRP by creditors.
They are holding 75% of the money related obligation. The NCLT can expand this
by another 90 days. Any individual,
95
The Insolvency and Bankruptcy Code (Act No. 31 OF 2016), s.18(b)
96
The Insolvency and Bankruptcy Code (Act No. 31 OF 2016), s.18(c)
41
administration, the creditors, or a third party can propose such a plan. It is the duty of
the RP to confirm that the arrange meets the criteria set out within the IBC, 2016. In
spite of the fact that, the IP cannot propose this arrange. However, it's not totally
restricted under code. The CoC sits together to gage possibility and worthiness of
determination plans submitted by various resolution candidates. Resolution Plan maybe
is the foremost important component of the complete process of resolution. Resolution
Plan alludes
to a arrange proposed by an RA (individual/ entity making such proposition) to resolve
the bankruptcy of the CD. Section 29A97 of the Code was presented. With the
expectation to deny all persons with vested intrigued from proposing plans, section
29A98 enrols criteria for ineligibility of RA. Consequently, those applicants drawing in
any one or more of the clauses should be ineligible to propose a resolution plan. The
plan so proposed must compulsorily bargain with instalment of the CIRP Costs in need,
instalment to operational creditors, management of issues of the CD on usage of such
arrange and other requirements laid down in section 30 99 of the Code. It is the obligation
of the RP to welcome resolution plans from imminent applicants.
2.2.6. DECISION (APPROVAL OR DISAPPROVAL OF RESOLUTION PLAN)

In case a plan is affirmed within this period and is authorized by the NCLT: - It gets
to be official on all “stakeholders” included within the CIRP. The term “stakeholders”
has not been
characterized. Whereas the IBC 2016100 notices that this plan makes a difference to
tie the workers, lenders, individuals, etc. But it is not clear that the point is related to
the other stakeholders within the resolution plan. If no resolution plan is affirmed in
this period: - If the resolution plan passes, at that point NCLT is required to arrange
the liquidation of the CD. After the endorsement of liquidation, COC names the
outlet to offer the resources of the CD and disperse them among the stakeholders.
The dissemination will be made by Section 53101 of the co.
97
98
ibid
99
100
101
30
Figure 2: Corporate Insolvency Resolution Process102
2.3. EFFECTIVITY OF CIRP

The result through CIRPs has been empowering. Till June, 2020, it has protected 250
CDs through determination plans, one third of which were in profound trouble. It has
alluded 955 CDs for liquidation, three-fourth of which were either wiped out or
outdated. The CDs protected had resources valued at Rs.1.01 lakh crore, whereas the
CDs alluded for liquidation had resources esteemed at Rs.0.38 lakh crore when they
were conceded to CIRP. Hence, in esteem terms,72% of troubled resources were
rescued. The feasible esteem of the resources accessible with the CDs protected,
when they entered the CIRP, was only Rs.1.01 lakh crore. The determination plans
recouped Rs.1.94 lakh crore, which is approximately 192% of the feasible esteem of
these CDs. Any other choice of recuperation or liquidation would have recovered at
best Rs.100 short the fetched of recovery/liquidation, whereas the leasers recovered
50 Rs.192 beneath the Code.103
The abundance recuperation of Rs.92 could be a reward since of the Code. Though
recovery is accidental beneath the Code, the FCs recouped 45% of their claims,
which is the highest among all choices accessible to banks for recuperation. In terms
of the
102
Vinod Kothari, IBC: Ushering in a New Era, Section III: Corporate Insolvency Resolution Process,
https://vinodkothari.com/wp-content/uploads/2019/06/Section-III-CIRP.pdf ,( Last visited on 14/7/21)
103
IBBI (2020), Insolvency and Bankruptcy News, April-June, 2020
31
World Bank's information, the overall recuperation rate for banks hopped from 26.0 to
71.6 cents on the dollar and the time taken for settling indebtedness too came down
altogether from 4.3 a long time to 1.6 a long time. 104 Beyond revival of firms and
acknowledge for banks, the Code is provoking resolutions within the early stages of
stretch when most CDs are rescued.
As it were a number of CDs, which fall flat to address the push in earlier stages, pass
through CIRP. At this organize, the esteem of the CD is considerably disintegrated, and
hence a few of them are protected, and others exchanged. A CIRP shifts control of
CD in between times determination proficient (IRP) and after that to a resolution
proficient (RP) and afterward to an effective RA, which may cause trade disruptions.
It permits as it were able and valid people to yield determination plans, which has the
potential to oust the current promoters. These disincentivise the CDs to start CIRP
intentionally in case of stress. The information demonstrates that less than 3% of
CIRPs that commenced amid 2019-20 were self-initiated by CDs 105. This
incompletely clarifies non-co-operation by the current promoters and management in a
few CIRPs, driving to strongly case. The case and assurance of several issues,
counting evasion exchanges, has been a challenge to the restricted capacity of the
AA. For a few reasons, counting case, it has by and large not been conceivable to
follow to timelines imagined beneath the Code as respects graduation of CIRPs as
well as their closure. “The 250 CIRPs, which have yielded determination plans by
the conclusion of June, 2020, took, on normal 380 days (after barring the time
prohibited by the AA), for conclusion. 955 CIRPs, completed in orders for
liquidation in 312 days, for conclusion”.106 The longer a “CD remains within the state
of indebtedness, the higher is the fetched, both coordinate and indirect”.107 As stated,
prior, CIRP isn't accessible in respect of defaults emerging amid COVID-19 period. It
isn't accessible in regard of defaults of less than Rs.1 crore as well as for stretch some
time recently default. Further, the accessibility of RAs would proceed to be a concern for
very a few times, as the business conditions are impossible to return to pre-pandemic
levels before long. The inevitable consequence when a CIRP falls flat to discover an
RA disheartens the partners to resort to CIRP.
104
World Bank, Ease of Doing Business Reports for various years
105
Supra note 84 at 23
106
Supra note 84 at 23
107
Gilson, Stuart C., Kose John, and Larry HP Lang (1990). "Troubled debt restructurings: An
empirical study of private reorganization of firms in default." Journal of Financial Economics, Vol. 27
Issue 2, October 1990
2.4. JURISDICTION OF NCLT DURING DISPUTE UNDER CIRP
The moratorium under Section 14 of IBC 2016 is essential to the objective of esteem
maximization of resources beneath the IBC. It is for this reason that the Supreme Court
in Swiss Ribbon Pvt. Ltd. v. Union of India 108 pointed out that to protect financial esteem
of the CD amid the CIRP, there ought to ideally be a single forum to settle upon the
rights and commitments of both CD and lenders. Under IBC such forum is the NCLT
which has been given wide powers under Section 60(5) 109 of the IBC to settle upon
things "emerging out of" or "in connection to" the insolvency resolution of the CD. This
jurisdictional scope is also has been clarified by the SC in Gujarat Urja Vikas Nigam
Restricted v. Amit Gupta & Ors110. Whereas, NCLTs have denied purview for
adjudicating issues like contractual debate. For occasion, the NCLT in Encote
Energy (India) Pvt. Ltd. v. V. Venkatachalam111 had repudiated jurisdiction to
adjudicate matters which included disputed facts and it also held that such issues have to
be chosen by "a court of competent jurisdiction". On comparative lines, the NCLT in
Roma Enterprises v. Mr. Martin S.K. Golla, Resolution Professional 112 and in Sri
Krishna Constructions v. Vasudevan, R.P. of Tiffins Barytes Asbestos & Paints Ltd113
have too denied jurisdiction, with the NCLT within the last-mentioned case holding
that the purview under section 60(5)114 cannot be to settle disputes which are in
progress in other courts. NCLT would have jurisdiction in legally binding issues
given that such disputes are in connection to the CIRP of CD.The corporate
insolvency law is though one of most successful and characterized provision but with
efficiency there are lots of gaps which are needed to be fulfilled while real time
implementation of CIRP proceedings. However, we cannot be permitted to pass into
an uncertain delay vanquishing the exceptionally object of the law. Therefore, to fill
those gaps there is still space remains for some procedure which will be more
efficient then CIRP being able to enhance clarity, able to reduce delayed justice and
keep the procedure simpler than CIRP.
108
Supra note 26 at 13
109
110
Gujarat Urja Vikas Nigam Restricted v. Amit Gupta AIR 2021 SC 0157
111
Encote Energy (India) Pvt. Ltd. v. V. Venkatachalam (2019) Company Appeal (AT) 1226
112
Roma Enterprises v. Mr. Martin S.K. Golla, Resolution Professional (2018) Company Appeal (AT)
232
113
Sri Krishna Constructions v. Vasudevan, R.P. of Tiffins Barytes Asbestos & Paints Ltd (2019)
Company Appeal (AT) 619
114
Supra Note 109 at 33
CHAPTER III- PROVISIONS OF PRE-PACKAGED
INSOLVENCY RESOLUTION PROCESS
3.1. REGULATION OF PRE-PACKAGED INSOLVENCY PROCESS IN INDIA
President issued ordinance; obligation default edge to be notified The Centre has
taken the Ordinance course to present PPIRP for companies classified as MSMEs.
India has 6-7 lakh companies that are classified as MSMEs, which may possibly
advantage from the newly-introduced pre-package in insolvency regime. 115 COVID-19
widespread has affected businesses, monetary markets and economies all over the
world, counting India, and has affected the trade operations of smaller scale, little
and medium endeavours – MSME division and uncovered numerous of them to
money related trouble. The Government has taken a few measures to moderate the
trouble caused by the widespread counting expanding the least sum of default for start of
CIRP to 1 crore rupees and suspending recording of applications for start of CIRP regard
of the defaults emerging amid the period of one year starting from 25th March 2020.
Such suspension for recording of applications for start of CIRP has finished on 24th
March 2021.116 The central government has proclaimed a law permitting the utilize of
pre-packs as an IRP for MSMEs with defaults up to Rs 1 crore within IBC,2016.
Under PPIRP, a focused borrower can yield a arrange for either settlement to secured
banks or resolution, which might include the deal of the co. to an investor and The
Insolvency and Bankruptcy Code (Amendment) Ordinance 2021117 was introduced by
President by virtue of Article 123118 on 4 April 2021 and it also brought amendment
into section 7(1)119 of MSME Development Act, 2006.120 Within the Indian setting, the
modern PPIRP administration
115
KR Srivats, Pre-pack insolvency for MSMEs now a reality, The Hindu Business Line, April 05,
2021, https://www.thehindubusinessline.com/news/national/pre-pack-insolvency-for-msmes-now-a-
reality/article34246885.ece (Last visited on 25/7/21)
116
PCS Prashant Thakre, Pre-Packaged Insolvency Resolution Process for MSME Sector,
https://taxguru.in/corporate-law/pre-packaged-insolvency-resolution-process-msme-sector.html (Last
visited on 25/7/21)
117
The Insolvency and Bankruptcy Code. (Amendment) Ordinance, 2021. (Ordinance No. 3 Of 2021)
118
The Constitution of India, 1950, Art 123
119
MSME Development Act, 2006 (Act No. 27 of 2006)
120
How the pre-packaged insolvency scheme for MSMEs will operate, The Economic times, April 07,
2021, https://bfsi.economictimes.indiatimes.com/news/industry/how-the-pre-packaged-insolvency-
scheme-for-msmes-will-operate/81946717 (Last visited on 25/7/21)
is alluded to as 'pre-packaged' since some time recently a defaulting MSME can
formally start the PPIRP process, it has got to approach its lenders with RP for its
revival or restructuring and get creditors' endorsement to start PPIRP.121 According to
M.S Sahoo “objective of presenting pre-pack for MSMEs is that it may be a cost-
effective component and animates the method for determination of MSMEs.”122
Therefore, it can be considered that pre-pack for MSME is first step towards
introducing aspects of informal mode of settlement to insolvency regime. Soumitra
Majumdar, shared views on pre-pack that “As with any legislation, this Ordinance will
also need to evolve, as it goes along to address implementation issues which will arise.
Illustratively, the payment/ restructuring terms to dissenting creditors may have to be
dealt with soon, especially in light of the recent Supreme Court judgement”.
123
According to Rajiv Chandak, “currently government has restricted Prepack
provisions for MSME and will extend to other Corporates in sometime. Prepacks
will help Corporate Debtors to enter into consensual restructuring with lenders and
address entire liability side of the Company.”124
The Ordinance embeds Chapter IIIA125 within IBC, 2016 to supply PPIRP for corporate
people classified as MSMEs. The presentation of the PPIRP does not alter the
existing CIRP but instep offers an alternative course that can be attempted by the CD
to supply a quicker and more debtor-friendly arrangement. Be that as it may, the Law
as it were presented this substitute prepare for MSMEs. MSMEs speak to a extend of
endeavours that are included in fabricating diverse products and administrations but
are restricted by greatest benefit and turnover limits. By presenting the Pre-Packaged
course as it were for MSMEs, a reasonable appraisal can be made with regard to how
the Pre- Packaged course would affect all other corporate structures.
121
Akshay Sachthey and Ushashi Nan, India: Unpacking the Pre-Pack: The New MSME Insolvency
Regime Explained, https://www.mondaq.com/india/insolvencybankruptcy/1058510/unpacking-the-pre-
pack-the-new-msme-insolvency-regime-explained, (Last visited on 25/7/21)
122
MS Sahoo, Chairperson, Insolvency and Bankruptcy Board of India (IBBI), KR Srivats, Pre-pack
insolvency for MSMEs now a reality, The Hindu Business Line, April 05, 2021,
https://www.thehindubusinessline.com/news/national/pre-pack-insolvency-for-msmes-now-a-
123
Soumitra Majumdar, Partner, J Sagar Associates, KR Srivats, Pre-pack insolvency for MSMEs now
a reality, The Hindu Business Line, April 05, 2021,
https://www.thehindubusinessline.com/news/national/pre-pack-insolvency-for-msmes-now-a-
124
Rajiv Chandak, Partner, Deloitte India, KR Srivats, Pre-pack insolvency for MSMEs now a reality,
The Hindu Business Line, April 05, 2021, https://www.thehindubusinessline.com/news/national/pre-
pack-insolvency-for-msmes-now-a-reality/article34246885.ece (Last visited on 25/7/21)
125
The Insolvency and Bankruptcy Code (Act No. 31 OF 2016), Chapter III A as inserted by The
Insolvency and Bankruptcy Code (Amendment) Ordinance, 2021 (No. 3 of 2021)
Whereas it is as it were constrained to MSMEs at current scenario, right now the
IBBI plans to roll out PPIRP for other corporates as well, it ought to be kept in
intellect that the success or failure of the same with MSMEs ought to be not treated
as a pointer of how the same will play out with all corporates. MSMEs serve as an
unmistakable gather of endeavours and have arrangements such as Section 240A126
securing them. Encourage, the current considerations on the presentation of a Special
Insolvency Resolution Process (SIRP) show that the legislature intends to make a
really custom fitted approach to MSMEs due to the uncommon nature of the industry
and its significance to the Indian economy.127
S.No. FEATURES DETAILS

1. One time settlement with
Nature of Process creditors before NCLT
2. Chapter III-A
Added under IBC,2016 (S.54A- S.54P) Pre -
package Insolvency Process
3. Default in repayment of loan is
Rs 10 lakh or more of no upper
limit prescribed for default
Default amount to go for PPRIP amount but criteria being
MSME should be satisfied to
opt for PPIRP
4. Co. has not undergone PPIRP or
completed CIRP during period
Cooling off period of 3 years preceding initiation
date
5. A bar is put upon CD to submit
RP if such CD is habitual
Eligibility defaulter. Hence, new section
29A is added to cover persons
126
127
Ms. Priyasha Goyal and Mr. Raghav Agrawal, Pre-Packaged Insolvency Resolution Process for
MSMEs, https://ibclaw.in/pre-pack-insolvency-resolution-process-for-msmes/ , (Last visited on
25/7/21)
not eligible to be Resolution
Applicant
6. 1.BOD in board meeting
2.Shareholder to approve with
Approvals Special Resolution in general
meeting
3.FC with 66 % majority in CoC
meeting
4.Adjudicating Authority -
NCLT
7. Trade creditors and OC interest PPIRP can only exercise when
their interest is not affected
8. Limited Role of RP RP has supervisory role and act
as watch dog over management
of CD whereas does not actually
control management
9. Deliberation between FC FC in consultation with each
other accept restricting plan as
given by co. duly approved by
shareholders of co. Same can be
filed before AA (NCLT)
10. Committee of Creditors FC not related parties to co.
shall be member of CoC for
taking important decision
11. Appointment of RP When application is filed before
AA for initiation of PPIRP the
RP is to be appointed of
creditors
12. Appointment of Registered Rp within 3 days after his
valuers appointment have to appoint 2
registered valuers for
determination of fair value of
CD under Regulation 38
13. Management of co. Management of co. is intact and
it shall remain with promoters
and management of the co.
RP as coordinator RP will run PPIRP as per
14. IBC,2016 under directions of
creditors and promoters. He
should act as coordinator
between co., creditors and
NCLT.
15. PPIRP Cost Low cost and responsibility of
co. to bear costs of PPIRP as it
is voluntary restructuring of co.
16. Duration Time duration to complete
PPIRP is 90 days and extend
up
to maximum 120 days
17. CoC Approval 66% of members of CoC vote in
favour of PPIRP to put it
before
NCLT
18. PPRIP preferred over CIRP When application is pending
by NCLT under S. 54 C is pending. AA
shall pass order to reject or
admit it before application filed
under S.7 or S.9 or S.10 during
pendency of application under
S.54C
TABLE 1: BASIC FEATURES: PRE-PACK FOR MSME128
128
Author made this table with reference to study and PCS Prashant Thakre, Pre-Packaged
Insolvency Resolution Process for MSME Sector, https://taxguru.in/corporate-law/pre-packaged-
insolvency-resolution-process-msme-sector.html (Last visited on 26/7/21)
3.2. MINIMUM AMOUNT OF DEFAULT
Within the IBC, 2016 in “section 4”129, new proviso shall be inserted, namely
– “Provided further that the Central Government may, by
notification, specify such minimum amount of default of higher
value, which shall not be more than one crore rupees, for matters
relating to the pre-packaged insolvency resolution process of
corporate debtors under Chapter III-A.”
However, through notification130 passed on 9 April 2021, central government specifies

such minimum value as Rs 10 lakh –
“In exercise of the powers conferred by the second proviso to
section 4 of the Insolvency and Bankruptcy Code, 2016 (31 of 2016),
as amended by the Insolvency and Bankruptcy Code (Amendment)
Ordinance, 2021 (3 of 2021), the Central Government hereby
specifies ten lakh rupees as the minimum amount of default for the
matters relating to the pre-packaged insolvency resolution process
of corporate debtor under Chapter III-A of the Code.”
3.3. PRE- CONDITIONS TO INITIATE OF PPIRP

 The financial creditors and CD, not being interested parties, having at least 66%
majority in valuation of budgetary obligation to propose and favour the name of IP who
will be appointed as RP for conduction of pre-pack resolution process
 The larger part of the Executives /Partners of CD to form an affirmation in Form P6/P7
stating-
(a) CD should file an application for starting PPIRP within time period not surpassing
90 days
(b) that the PPIRP isn't being started to swindle any individual
(c) Name of IP is proposed and thereby appointed as RP under Section 54A(e)131
 The Individuals of CD (in case co.) to pass a special resolution or endorsement of three
fourth of partners (in case of LLP) for starting PPIRP under Section 54A132 in Form P4.
 CD have to provide the FCs with the following before getting the approval of FC:
(a) Affirmation of Executive or Partners
129
The Insolvency and Bankruptcy Code, 2016 (Act no. 31 of 2016), s.4
130
Ministry of Corporate affairs vide notification no. S.O 1543 E available on
https://www.ibbi.gov.in/uploads/legalframwork/e9b1c4b3489e51213db701b27222b474.pdf (Last
visited on 26/7/21)
131
The Insolvency and Bankruptcy Code. (Amendment) Ordinance, 2021. (Ordinance No. 3 Of 2021),
s.54A(e))
132
s.54A
(b) Special Resolution or by partner
(c) Base Resolution Plan
(d) Any other reports or data as may be indicated
FIGURE 3: CONDITIONS FOR INITIATING PPIRP133
3.4 PERSON ELIGIBLE TO FILE THE APPLICATION

Only CD is eligible to file application with regards to initiation of Pre-pack insolvency
resolution only after fulfilling the prerequisites as per the code.
“As said in Section 54C (1)134 under IBC 2016135 an application with AA for starting
PPIRP can be filed by only by CD as defined under Section 5(5) which means:
(a) corporate debtor
(b) a part or partner of the CD who is authorised to make an application for the CIRP
or the PPIRP, as the case may be, under the constitutional report of the CD;
(c) a person who is in charge of managing the operations and assets of the corporate
debtor
(d) an individual who has the control and supervision over the financial affairs of the
CD”136
133
Megha Mittal, packed with ‘ifs & buts' – Will Prepacks have any takers?
https://vinodkothari.com/wp-content/uploads/2021/04/IBC-Ordinance-Final-File.pdf (Last visited on
27/7/21)
134
s.54C
135
The Insolvency and Bankruptcy Code 2016 (Act No. 31 of 2016)
136
Supra note 134 at 40
Corporate debtor (CD) which includes MSME as defined under sec 7(1) of MSME
Development Act, 2006137-
CLASSIFICATION MICRO SMALL MEDIUM
Manufacturing Investment Not more Not more Not more
enterprises and In Plant, than Rs 1 than Rs 10 than Rs 50
enterprises Machinery crore crore crore
rendering services or
Equipment
Annual Not more Not more Not more
Income than Rs 5 than Rs 5 than Rs 250
crore crore crore
TABLE 4: CLASSIFICATION OF MSME138
And the minimum default is of Rs 10 lakhs as per notified by Central government under
notification on 9 April 2021.
3.4.1 ELIGIBLTY OF CD TO MAKING APPLICATION
CD can only make such application to initiate the proceedings for PPIRP if it
certifies the conditions given under sec 54 A (2) –
“Without prejudice to sub-section (1), an application for initiating
pre-packaged insolvency resolution process may be made in respect
of a corporate debtor, who commits a default referred to in section 4,
subject to the following conditions, that—
(a) it has not undergone pre-packaged insolvency resolution process
or completed corporate insolvency resolution process, as the case
may be, during the period of three years preceding the initiation date
(b) it is not undergoing a corporate insolvency resolution process
(c) no order requiring it to be liquidated is passed under section 33
(d) it is eligible to submit a resolution plan under section 29A”139
3.4.2. PERSON WHO IS NOT ENTITLED TO FILE APPLICATION

Sec 11 classifies persons who are not entitled to file an application to initiate the PPIRP
proceedings –
a) “CD undergoing a CIRP or PPIRP
b) Financial creditor (FC) or an Operational Creditor (OC) of CD undergoing PPIRP
c) CD in respect of whom resolution plan has been approved under Chapter III-A(PPIRP)
12 months preceding the date of making of application
d) CD or a FC who has violated any of the terms of Resolution plan which was
approved 12 months before the date of making of an PPIRP application
137
Micro, Small and Medium Enterprises Development Act, 2006 (Act No. 27 of 2006)
138
Author made table referring to Micro, Small and Medium Enterprises Development Act, 2006 (Act
No. 27 of 2006), s.7(1) and took inspiration from 138 PCS Prashant Thakre, Pre-Packaged Insolvency
Resolution Process for MSME Sector, https://taxguru.in/corporate-law/pre-packaged-insolvency-
resolution-process-msme-sector.html (Last visited on 27/7/21)
139
s.54A(2)
44
e) CD in respect of whom a liquidation order has made”140
3.5. PREFERENCE TO PPIRP OVER CIRP PROCEEDINGS

However, by the virtue of to be newly inserted section 11 A, it is ensured that first
preference will be given to PPIRP if the CD qualifies the eligibility over the CIRP
proceedings. Section 11 A stated as follows –
“11A. (1) Where an application filed under section 54C is pending,
the
Adjudicating Authority shall pass an order to admit or reject such
application,
before considering any application filed under section 7 or section 9
or section 10
during the pendency of such application under section 54C, in respect
of the
same corporate debtor.
(2) Where an application under section 54C is filed within fourteen
days of
filing of any application under section 7 or section 9 or section 10,
which is
pending, in respect of the same corporate debtor, then,
notwithstanding anything contained in sections 7, 9 and 10, the
Adjudicating Authority shall first dispose of the application under
section 54C.
(3) Where an application under section 54C is filed after fourteen
days of
the filing of any application under section 7 or section 9 or section 10,
in respect
of the same corporate debtor, the Adjudicating Authority shall first
dispose of the application under sections 7, 9 or 10.
(4) The provisions of this section shall not apply where an application
under section 7 or section 9 or section 10 is filed and pending as on
the date of the commencement of the Insolvency and Bankruptcy
Code (Amendment) Act, 2021.”141
3.6. DUTIES OF INSOLVENCY PROFESSIONAL BEFORE INTIATION OF

PPIRP
One of the pre-requisites of initiation of PPRP and filing application is to “propose
name of the insolvency professional and he will be considered as resolution
professional under the code” and will perform duties after date of approval under
section 54A(2)(e)142 and duties thereby are mentioned under section 54B as follows –
140
The Insolvency and Bankruptcy Code 2016 (Act No. 31 of 2016), s.11
141
s.11 A
142
s.54A(2)(e)
45
“54B. (1) The insolvency professional, proposed to be appointed as
the resolution professional, shall have the following duties
commencing from the date of the approval under clause (e) of sub-
section (2) of section 54A, namely:
(a) prepare a report in such form as may be specified, confirming
whether the corporate debtor meets the requirements of section
54A, and the base resolution plan conforms to the requirements
referred to in clause (c) of sub section (4) of section 54A;
(b) file such reports and other documents, with the Board, as may
be specified; and
(c) perform such other duties as may be specified.
(2) The duties of the insolvency professional under sub-section (1)
shall
cease, if, —
(a) the corporate debtor fails to file an application for initiating pre-
packaged insolvency resolution process within the time period as
stated under the declaration referred to in clause (f) of sub-section (2)
of section 54A; or
(b) the application for initiating pre-packaged insolvency resolution
process is admitted or rejected by the Adjudicating Authority, as
the case may be.
(3) The fees payable to the insolvency professional in relation to
the duties performed under sub-section (1) shall be determined and
borne in such manner as may be specified and such fees shall form
part of the pre-packaged insolvency resolution process costs, if the
application for initiation of pre-packaged insolvency resolution
process is admitted.”143
3.7. PROCEDURE AFTER MAKING APPLICATION FOR INITIATING

PPIRP
The application is filed in front of AA (NCLT) to initiate the proceedings of PPIRP and
procedure further is also given under section 54C144.
“54C. (1) Where a corporate debtor meets the requirements of section
54A, a corporate applicant thereof may file an application with the
Adjudicating Authority
for initiating pre-packaged insolvency resolution process.
(2) The application under sub-section (1) shall be filed in such
form, containing such particulars, in such manner and accompanied
with such fee as
may be prescribed.
(3) The corporate applicant shall, along with the application,
furnish—
(a) the declaration, special resolution or resolution, as the case may
be, and the approval of financial creditors for initiating pre-packaged
143
s.54B
144
s.54C
insolvency resolution process in terms of section 54A; (b) the name
and written consent, in such form as may be specified, of the
insolvency professional proposed to be appointed as resolution
professional, as approved under clause (e) of sub-section (2) of
section 54A, and his report as referred to in clause (a) of sub-section
(1) of section 54B;
(c) a declaration regarding the existence of any transactions of the
corporate debtor that may be within the scope of provisions in respect
of
avoidance of transactions under Chapter III or fraudulent or wrongful
trading
under Chapter VI, in such form as may be specified;
(d) information relating to books of account of the corporate debtor
and such other documents relating to such period as may be specified.
(4) The Adjudicating Authority shall, within a period of fourteen days
of the
receipt of the application, by an order, -
(a) admit the application, if it is complete; or
(b) reject the application, if it is incomplete:
Provided that the Adjudicating Authority shall, before rejecting an
application, give notice to the applicant to rectify the defect in the
application within seven days from the date of receipt of such
notice from the Adjudicating Authority.
(5) The pre-packaged insolvency resolution process shall
commence from
the date of admission of the application under clause (a) of sub-
section (4).”145
THREE-FOLD APPROVAL REQUIREMENT FOR INITIATION OF

PROCEEDINGS
Requirement of Chapter IIIA is the CD to get three-fold approval for starting the
process of PIRP which includes the approval of Shareholders, Unrelated financial
creditors and AA(NCLT). Requirement of approval includes proposal for initiation
of PIRP may be made by the lenders or the CD itself, copy of the same is given to
FCs with all related documents and resolution plan which need to be submitted
within two days of commencement of proceedings for PPIRP. While getting such
approval, the majority of BOD of the CD moreover give an affirmation to embrace
that the start of PIRP is beneficial. Finally, PPIRP is initiated from PPIRP
commencement date after final call is taken by AA.
145
Supra note 144 on 43
FIGURE 4: THREE-FOLD APPROVAL FOR INITIATION OF PPIRP146
3.8. TIME LIMITATION FOR COMPLETION OF PPIRP

The time limit which is provided for completion of proceedings of PPIRP is maximum
of 120 days which initially is 90 days and after extension in special cases 30 days more
are provided.
“54D. (1) The pre-packaged insolvency resolution process shall be
completed within a period of one hundred and twenty days from the
pre-packaged insolvency commencement date.
(2) Without prejudice to sub-section (1), the resolution
professional shall submit the resolution plan, as approved by the
committee of creditors, to the Adjudicating Authority under sub-
section (4) or sub- section (12), as the case may be, of section 54K,
within a period of ninety days from the pre-packaged insolvency
commencement date.
(3) Where no resolution plan is approved by the committee of
creditors within the time period referred to in sub-section (2), the
resolution professional shall, on the day after the expiry of such
time period, file an application with the Adjudicating Authority for
termination of the pre-packaged insolvency resolution process in such
form and manner as may be specified.”147
3.9. PUBLIC DECLARATION AND MORATORIUM PERIOD

The period of moratorium starts right after the application for initiation of
proceedings is approved until the process is completed and therefore declaration is
made with regards to initiation of PPIRP and moratorium period.
“54E. (1) The Adjudicating Authority shall, on the pre-packaged
insolvency commencement date, along with the order of admission
under section 54C—
146
28/7/21)
147
s.54
(a) declare a moratorium for the purposes referred to in sub-section
(1) read with sub-section (3) of section 14, which shall, mutatis
mutandis applies, to the proceedings under this Chapter
(b) appoint a resolution professional— (i) as named in the application,
if no disciplinary proceeding is pending against him; or; (ii) based on
the recommendation made by the Board, if any disciplinary
proceeding is pending against the insolvency professional named in
the application
(c) cause a public announcement of the initiation of the pre-packaged
insolvency resolution process to be made by the resolution
professional, in such form and manner as may be specified,
immediately after his appointment.
(2) The order of moratorium shall have effect from the date of such
order till the date on which the pre-packaged insolvency resolution
process period comes to an end.”148
3.10. DUTIES OF RP AFTER INITIATION OF PROCEEDING

Powers and duties of RP after the initiation of proceeding is given under 54F as follows-
“54F. (1) The resolution professional shall conduct the pre-packaged insolvency
resolution process of a corporate debtor during the pre-packaged
insolvency resolution process period.
(2) The resolution professional shall perform the following duties, namely: -
(a) confirm the list of claims submitted by the corporate debtor under section
54G, in such manner as may be specified;
(b) inform creditors regarding their claims as confirmed under
clause (a), in such manner as may be specified;
(c) maintain an updated list of claims, in such manner as may be
specified;
(d) monitor management of the affairs of the corporate debtor;
(e) inform the committee of creditors in the event of breach of any of the
obligations of the Board of Directors or partners, as the case may be, of the
corporate debtor, under the provisions of this Chapter and the rules and
regulations made thereunder;
(f) constitute the committee of creditors and convene and attend all its meetings;
(g) prepare the information memorandum on the basis of the
preliminary information memorandum submitted under section 54G and any
other relevant information, in such form and manner as may be specified;
(h) file applications for avoidance of transactions under Chapter III or fraudulent
or wrongful trading under Chapter VI, if any; and
(i) such other duties as may be specified.
(3) The resolution professional shall exercise the following powers, namely: -
(a) access all books of account, records and information available with the
corporate debtor;
(b) access the electronic records of the corporate debtor from an information
utility having financial information of the corporate debtor;
148
s.54E
(c) access the books of account, records and other relevant documents of the
corporate debtor available with Government authorities, statutory auditors,
accountants and such other persons as may be specified;
(d) attend meetings of members, Board of Directors and committee of directors,
or partners, as the case may be, of the corporate debtor;
(e) appoint accountants, legal or other professionals in such manner as may be
specified;
(f) collect all information relating to the assets, finances and operations of the
corporate debtor for determining the financial position of the corporate debtor
and the existence of any transactions that may be within the scope of
provisions relating to avoidance of transactions under Chapter III or fraudulent or
wrongful trading under Chapter VI, including information relating to -
(i) business operations for the previous two years from the date
of pre-packaged insolvency commencement date;
(ii) financial and operational payments for the previous two years
from the date of pre-packaged insolvency commencement date;
(iii) list of assets and liabilities as on the initiation date; and
(iv) such other matters as may be specified;
(g) take such other actions in such manner as may be specified.
(4) From the date of appointment of the resolution professional, the financial
institutions maintaining accounts of the corporate debtor shall furnish all
information relating to the corporate debtor available with them to the resolution
professional, as and when required by him.
(5) The personnel of the corporate debtor, its promoters and any other person
associated with the management of the corporate debtor shall extend all
assistance and cooperation to the resolution professional as may be required
by him to perform his duties and exercise his powers, and for such purposes,
the provisions of sub-sections (2) and (3) of section 19 shall, mutatis mutandis
apply, in relation to the proceedings under this Chapter.
(6) The fees of the resolution professional and any expenses incurred by him for
conducting the pre-packaged insolvency resolution process shall be
determined in such manner as may be specified:
Provided that the committee of creditors may impose limits and conditions on
such fees and expenses:
Provided further that the fees and expenses for the period prior to the constitution
of the committee of creditors shall be subject to ratification by it.
(7) The fees and expenses referred to in sub-section (6) shall be borne in such
manner as may be specified”149
3.11. PRELIMINARY INFORMATION MEMORANDUM

However, a list of claims and PIM to provide important information for determining
and formulation of RP.
“54G. (1) The corporate debtor shall, within two days of the pre-
packaged insolvency commencement date, submit to the resolution
professional the following information, updated as on that date, in
such form and manner as may be specified, namely: —
149
s.54F
50
(a) a list of claims, along with details of the respective creditors, their
security interests and guarantees, if any; and
(b) a preliminary information memorandum containing
information relevant for formulating a resolution plan.
(2) Where any person has sustained any loss or damage as a
consequence of the omission of any material information or inclusion
of any misleading information in the list of claims or the
preliminary information memorandum submitted by the corporate
debtor, every person who—
(a) is a promoter or director or partner of the corporate debtor, as
the case may be, at the time of submission of the list of claims or
the preliminary information memorandum by the corporate debtor; or
(b) has authorised the submission of the list of claims or the
preliminary information memorandum by the corporate debtor, shall,
without prejudice to section 77A, be liable to pay compensation to
every person who has sustained such loss or damage.
(3) No person shall be liable under sub-section (2), if the list of
claims or the preliminary information memorandum was submitted
by the corporate debtor without his knowledge or consent.
(4) Subject to section 54E, any person, who sustained any loss or
damage
as a consequence of omission of material information or inclusion
of any misleading information in the list of claims or the
preliminary information memorandum shall be entitled to move a
court having jurisdiction for seeking compensation for such loss or
damage.”150
3.12. MANAGEMENT OF AFFAIRS OF CORPORATE DEBTOR

Whereas here unlike CIRP the PPIRP does not handover the management to RP and
management of CD remains still but under the RP is there to look after and keep – an –
eye on CD and it represents debtor-in -possession model and read with Regulation
50(2).151
“54H. During the pre-packaged insolvency resolution process period-
(a) the management of the affairs of the corporate debtor shall
continue to vest in the Board of Directors or the partners, as the
case may be, of the corporate debtor, subject to such conditions as
may be specified;
(b) the Board of Directors or the partners, as the case may be, of
the corporate debtor, shall make every endeavour to protect and
preserve the value of the property of the corporate debtor, and
manage its operations as a going concern; and
(c) the promoters, members, personnel and partners, as the case may
be, of the corporate debtor, shall exercise and discharge their
contractual or statutory rights and obligations in relation to the
150
s.54G
151
Insolvency and Bankruptcy Board of India (Pre-Packaged Insolvency Resolution Process)
Regulations, 2021, https://ibclaw.in/ibbi-pre-packaged-insolvency-resolution-process-regulations-2021/
, (Last visited on 28/7/21)
48
corporate debtor, subject to the provisions of this Chapter and such
other conditions and restrictions as may be prescribed”152
whereas if CoC with majority not less than 66% is in favour of vesting right of
management then under that case management of CD is with RP and application is also
made for same under Form 14 by virtue of Section 54 J which states as follows –
“54J. (1) Where the committee of creditors, at any time during the
pre-packaged insolvency resolution process period, by a vote of not
less than sixty-six per cent. of the voting shares, resolves to vest the
management of the corporate debtor with the resolution professional,
the resolution professional shall make an application for this
purpose to the Adjudicating Authority, in such form and manner as
may be specified.
(2) On an application made under sub-section (1), if the Adjudicating
Authority is of the opinion that during the pre-packaged insolvency
resolution process—
(a) the affairs of the corporate debtor have been conducted in a
fraudulent manner; or
(b) there has been gross mismanagement of the affairs of the
corporate debtor, it shall pass an order vesting the management of the
corporate debtor with the resolution professional.
(3) Notwithstanding anything to the contrary contained in this
Chapter, the
provisions of—
(a) sub-sections (2) and (2A) of section 14;
(b) section 17;
(c) clauses (e) to (g) of section 18;
(d) sections 19 and 20;
(e) sub-section (1) of section 25;
(f) clauses (a) to (c) and clause (k) of sub-section (2) of section 25;
and
(g) section 28,
shall, mutatis mutandis applies, to the proceedings under this Chapter,
from the
date of the order under sub-section (2), until the pre-packaged
insolvency
resolution process period comes to an end.”153
3.13. COMMITTEE OF CREDITORS

After the initiation of PPIRP within the 7 days, the RP is needed for constitution the
CoC after receiving the list of claims then such data is verified by CoC. In any case, the
152
s.54H
153
s.54J
49
CoC may be reconstituted as and when the list of claims is upgraded then in any
case, it will not influence the choices taken by the CoC earlier to such re-constitution.
“54-I. (1) The resolution professional shall, within seven days of
the pre-packaged insolvency commencement date, constitute a
committee of creditors, based on the list of claims confirmed under
clause (a) of sub-section (2) of section 54F:
Provided that the composition of the committee of creditors shall
be altered
on the basis of the updated list of claims, in such manner as may be
specified, and any such alteration shall not affect the validity of any
past decision of the
committee of creditors.
(2) The first meeting of the committee of creditors shall be held within
seven
days of the constitution of the committee of creditors.
(3) The provisions of section 21, except sub-section (1) thereof, shall,
mutatis
mutandis applies, in relation to the committee of creditors under
this Chapter:
Provided that for the purposes of this sub-section, references to
resolution
professional under sub-sections (9) and (10) of section 21, shall be
construed as references to corporate debtor or the resolution
professional.”154
3.14. RESOLUTION PLAN

The exceptionally pith of PPIRP, is that resolution plan to be negotiated prior
between the CD and the lenders, and is to be submitted in front of AA for obtaining
approval. This base resolution plan should be made considering sections 54K and
54L. RP will be given to forward it to CoC within 2 days of initiation of PPIRP
proceedings and in case it is approved by CoC then need to be submitted to the AA
within 90 days commencement of proceedings.
3.14.1. PROCEDURE WITH REGARD TO RESOLUTION PLAN

“54K. (1) The corporate debtor shall submit the base resolution plan,
referred
to in clause (c) of sub-section (4) of section 54A, to the resolution
professional
within two days of the pre-packaged insolvency commencement date,
and the
resolution professional shall present it to the committee of creditors.
154
s.54I
(2) The committee of creditors may provide the corporate debtor an
opportunity to revise the base resolution plan prior to its approval
under
sub-section (4) or invitation of prospective resolution applicants
under sub-section
(5), as the case may be.
(3) The resolution plans and the base resolution plan, submitted under
this
section shall conform to the requirements referred to in sub-sections
(1) and (2) of
section 30, and the provisions of sub-sections (1), (2) and (5) of
section 30 shall,
mutatis mutandis applies, to the proceedings under this Chapter.
(4) The committee of creditors may approve the base resolution
plan for
submission to the Adjudicating Authority if it does not impair any
claims owed by
the corporate debtor to the operational creditors.
(5) Where—
(a) the committee of creditors does not approve the base resolution
plan under sub-section (4); or
(b) the base resolution plan impairs any claims owed by the corporate
debtor to the operational creditors,
the resolution professional shall invite prospective resolution
applicants to submit
a resolution plan or plans, to compete with the base resolution plan,
in such
manner as may be specified.
(6) The resolution applicants submitting resolution plans pursuant
to invitation under sub-section (5), shall fulfil such criteria as may
be laid down by
the resolution professional with the approval of the committee of
creditors, having
regard to the complexity and scale of operations of the business of the
corporate
debtor and such other conditions as may be specified.
(7) The resolution professional shall provide to the
resolution applicants, —
(a) the basis for evaluation of resolution plans for the purposes of
sub-section (9), as approved by the committee of creditors subject to
such
conditions as may be specified; and
(b) the relevant information referred to in section 29, which shall,
mutatis mutandis applies, to the proceedings under this Chapter,
in such manner as may be specified.
(8) The resolution professional shall present to the committee of
creditors,
for its evaluation, resolution plans which conform to the requirements
referred to in sub-section (2) of section 30.
(9) The committee of creditors shall evaluate the resolution plans
presented
by the resolution professional and select a resolution plan from
amongst them.
(10) Where, on the basis of such criteria as may be laid down by it,
the committee of creditors decides that the resolution plan selected
under sub-section (9) is significantly better than the base resolution
plan, such resolution plan may be selected for approval under sub-
section (12):
Provided that the criteria laid down by the committee of creditors
under this
sub-section shall be subject to such conditions as may be specified.
(11) Where the resolution plan selected under sub-section (9) is not
considered for approval or does not fulfil the requirements of sub-
section (10) shall compete with the base resolution plan, in such
manner and subject such
conditions as may be specified, and one of them shall be selected for
approval
under sub-section (12).
(12) The resolution plan selected for approval under sub-section (10)
or
sub-section (11), as the case may be, may be approved by the
committee of
creditors for submission to the Adjudicating Authority:
Provided that where the resolution plan selected for approval under
sub-section (11) is not approved by the committee of creditors, the
resolution professional shall file an application for termination of the
pre-packaged insolvency resolution process in such form and manner
as may be specified.
(13) The approval of the resolution plan under sub-section (4) or
sub-section (12), as the case may be, by the committee of creditors,
shall be by a vote of not less than sixty-six per cent. of the voting
shares, after considering its feasibility and viability, the manner of
distribution proposed, taking into account the order of priority
amongst creditors as laid down in sub-section (1) of section 53,
including the priority and value of the security interest of a secured
creditor and such other requirements as may be specified.
(14) While considering the feasibility and viability of a resolution
plan,
where the resolution plan submitted by the corporate debtor provides
for
impairment of any claims owed by the corporate debtor, the
committee of creditors may require the promoters of the corporate
debtor to dilute their shareholding or voting or control rights in the
corporate debtor:
Provided that where the resolution plan does not provide for such
dilution,
the committee of creditors shall, prior to the approval of such
resolution plan
under sub-section (4) or sub-section (12), as the case may be,
record reasons for its approval.
(15) The resolution professional shall submit the resolution plan as
approved
by the committee of creditors under sub-section (4) or sub-section
(12), as the case may be, to the Adjudicating Authority.
Explanation I.—For the removal of doubts, it is hereby clarified that,
the
corporate debtor being a resolution applicant under clause (25) of
section 5, may submit the base resolution plan either individually
or jointly with any other person.
Explanation II. —For the purposes of sub-sections (4) and (14),
claims
shall be considered to be impaired where the resolution plan does
not provide for the full payment of the confirmed claims as per the
updated list of claims maintained by the resolution professional.”155
3.14.2. APPROVAL OF RESOLUTION PLAN

“54L. (1) If the Adjudicating Authority is satisfied that the resolution
plan as approved by the committee of creditors under sub-section
(4) or sub-section (12), as the case may be of section 54K, subject
to the conditions provided therein, meets the requirements as
referred to in sub-section (2) of section 30, it shall, within thirty days
of the receipt of such resolution plan, by order, approve the
resolution plan: Provided that the Adjudicating Authority shall,
before passing an order for
approval of a resolution plan under this sub-section, satisfy itself that
the
resolution plan has provisions for its effective implementation.
(2) The order of approval under sub-section (1) shall have such effect
as
provided under sub-sections (1), (3) and (4) of section 31, which
shall, mutatis mutandis applies, to the proceedings under this Chapter.
(3) Where the Adjudicating Authority is satisfied that the
resolution plan
does not conform to the requirements referred to in sub-section (1), it
may, within thirty days of the receipt of such resolution plan, by an
order, reject the resolution plan and pass an order under section
54N.
section,
where the Adjudicating Authority has passed an order under sub-
section (2) of section 54J and the resolution plan approved by the
committee of creditors under sub-section (4) or sub-section (12), as
the case may be of section 54K, does not result in the change in the
management or control of the corporate debtor to a person who was
155
s.54K
not a promoter or in the management or control of the corporate
debtor, the Adjudicating Authority shall pass an order—
(a) rejecting such resolution plan;
(b) terminating the pre-packaged insolvency resolution process and
passing a liquidation order in respect of the corporate debtor as
referred to
in sub-clauses (i), (ii) and (iii) of clause (b) of sub-section (1) of
section 33; and
(c) declaring that the pre-packaged insolvency resolution process
costs, if any, shall be included as part of the liquidation costs for the
purposes of liquidation of the corporate debtor.”156
3.14.3. APPEAL (SECTION – 54M)

“54M. Any appeal against an order approving the resolution plan
under
sub-section (1) of section 54L, shall be on the grounds laid down
in sub-section (3) of section 61.”157
3.15. TERMINATION OF PPIRP

Suppose, the COC does not affirmed the rebuilding plan at that point PIRP gets
terminated there and co. and order regarding vesting of control of management of co.
and liquidation order of co. by AA is passed accordingly.
“54N. (1) Where the resolution professional files an application
with the Adjudicating Authority, — (a) under the proviso to sub-
section
(12) of section 54K; or
(b) under sub-section (3) of section 54D, the Adjudicating
Authority shall, within thirty days of the date of such application,
by an order,
— (i) terminate the pre-packaged insolvency resolution process; and
(ii) provide for the manner of continuation of proceedings initiated
for avoidance of transactions under Chapter III or proceedings
initiated under section 66 and section 67A, if any.
(2) Where the resolution professional, at any time after the pre-
packaged insolvency commencement date, but before the approval of
resolution plan under sub-section (4) or sub-section (12), as the case
may be of section 54K, intimates the Adjudicating Authority of the
decision of the committee of creditors, approved by a vote of not less
than sixty-six per cent. of the voting shares, to terminate the pre-
packaged insolvency resolution process, the Adjudicating Authority
shall pass an order under sub-section (1).
(3) Where the Adjudicating Authority passes an order under sub-
section (1), the corporate debtor shall bear the pre-packaged
insolvency resolution process costs, if any.
156
s.54L
157
s.54M
section, where the Adjudicating Authority has passed an order
under sub-section (2) of section 54J and the pre-packaged
insolvency resolution process is required to be terminated under
sub-section (1); the Adjudicating Authority shall pass an order—
(a) of liquidation in respect of the corporate debtor as referred to in
sub-clauses (i), (ii) and (iii) of clause (b) of sub-section (1) of section
33; and
(b) declare that the pre-packaged insolvency resolution process costs,
if any, shall be included as part of the liquidation costs for the
purposes of liquidation of the corporate debtor.”158
After termination of PPIRP proceedings then co. is now eligible for the initiation of
CIRP proceeding with fully judicial involvement and hence, CIRP can be initiated after
failure of PPIRP.
“54-O. (1) The committee of creditors, at any time after the pre-
packaged insolvency commencement date but before the approval
of resolution plan under sub-section (4) or sub-section (12), as the
case may be of section 54K, by a vote of not less than sixty-six per
cent. of the voting shares, may resolve to initiate a corporate
insolvency resolution process in respect of the corporate debtor, if
such corporate debtor is eligible for corporate insolvency resolution
process under Chapter II.
(2) Notwithstanding anything to the contrary contained in Chapter II,
where the resolution professional intimates the Adjudicating
Authority of the decision of the committee of creditors under sub-
section (1), the Adjudicating Authority shall, within thirty days of the
date of such intimation, pass an order to — (a) terminate the pre-
packaged insolvency resolution process and initiate corporate
insolvency resolution process under Chapter II in respect of the
corporate debtor; (b) appoint the resolution professional referred to in
clause (b) of sub-section (1) of section 54E as the interim resolution
professional, subject to submission of written consent by such
resolution professional to the Adjudicating Authority in such form as
may be specified; and (c) declare that the pre-packaged insolvency
resolution process costs, if any, shall be included as part of insolvency
resolution process costs for the purposes of the corporate
insolvency resolution process of the corporate debtor.
(3) Where the resolution professional fails to submit written
consent under clause (b) of sub-section (2), the Adjudicating
Authority shall appoint an interim resolution professional by
making a reference to the Board for recommendation, in the
manner as provided under section 16.”
158
s.54N
3.16. PENALTIES
In case of contravention or misconduct during the process of PPIRP penalties are
provided under newly inserted sections 67 A for fraudulent management of CD and 77
A for offences related to PPIRP and are as follows-
“67A. On and after the pre-packaged insolvency commencement
date, where an officer of the corporate debtor manages its affairs with
the intent to defraud creditors of the corporate debtor or for any
fraudulent purpose, the Adjudicating Authority may, on an
application by the resolution professional, pass an order imposing
upon any such officer, a penalty which shall not be less than one lakh
rupees, but may extend to one crore rupees.”159
“77A. (1) Where-
(a) a corporate debtor provides any information in the application
under section 54C which is false in material particulars, knowing it to
be false or omits any material fact, knowing it to be material; or
(b) a corporate debtor provides any information in the list of claims
or the preliminary information memorandum submitted under sub-
section (1) of section 54G which is false in material particulars,
knowing it to be false or omits any material fact, knowing it to be
material; or
(c) any person who knowingly and wilfully authorised or permitted
the furnishing of such information under sub-clauses (a) and (b), such
corporate debtor or person, as the case may be, shall be punishable
with imprisonment for a term which shall not be less than three years,
but which may Amendment of section 61. Amendment of section 65.
Insertion of new section 67A. Fraudulent management of corporate
debtor during pre-packaged insolvency resolution process.
(2) If a director or partner of the corporate debtor, as the case may
be, deliberately contravenes the provisions of Chapter III-A, such
person shall be punishable with imprisonment for not less than
three years, but which may extend to five years, or with fine which
shall not be less than one lakh rupees, but which may extend to one
crore rupees, or with both.
Explanation. —For the purposes of this section and sections 75, 76
and 77, an application shall be deemed to be false in material
particulars in case the facts mentioned or omitted in the application,
if true, or not omitted from the application, as the case may be, would
have been sufficient to determine the existence of a default under this
Code.”160
159
s.67 A
160
s.77 A
FIGURE 5: PROCEDURE – PPIRP 161
3.17. PRE-PACKAGED INSOLVENCY RESOLUTION PROCESS vis- a - vis
CORPORATE INSOLVENCY RESOLUTION PROCESS
Venkata Subramanian in an interview to Indian Express discussing about pre-
package insolvency resolution process pointed out that -
“Transfer of control from the incumbent management to an
insolvency professional as is the case in the CIRP leads to disruptions
in the business and loss of some high-quality human resources and
asset value. pre-pack would act as an important alternative
resolution mechanism to the CIRP and would help lower the burden
on the NCLTs.”162
161
28/7/21)
162
Dinkar Venkatasubramanian, partner and national leader, restructuring and turnaround services, EY
available at Karunjit Singh, explained: What are pre-packs under the present insolvency regime? The
Indian Express, 28 July 2020, https://indianexpress.com/article/explained/insolvency-and-bankruptcy-
code-pre-packs-explained-6527116/ , (Last visited on 29/7/21)
Pre-packaged Insolvency Resolution Process is new and modified version instituted
in insolvency regime under IBC, 2016. However, it is not there to replace CIRP and
normal process of CIRP remain as it is rather PPIRP is introduced as more effective
mode to become a better alternative than CIRP so that parties to the process prefer it
first at priority basis and CIRP should be availed as last option. In any case if process
of pre-package insolvency resolution does not succeed then it gets terminated and
CD gets eligible for CIRP.
These difference in provisions is discussed by following table-
PPIRP CIRP
ELIGIBLTY It is applicable as of now It is applicable on all
only on companies and kinds of corporate
limited liability debtors i.e., all kind of
partnerships which are companies and limited
classified as MSMEs with liability partnerships
minimum threshold where
default of Rs. 10 lakhs and minimum threshold of
it includes COVID default is Rs. 1 crore
defaults. excluding COVID-19
defaults.
NATURE OF THE The procedure under CIRP is insolvency
PROCEEDINGS PPIRP can be considered process where resolution
as the hybrid procedure is done through judicial
i.e., both formal which intervention and hence
includes judicial role by formal proceedings is
introducing approval of there without element of
AA(NCLT) and informal informal nature.
in the form of out of court
settlement.
WHO INITIATES Application for starting Application for initiation
PROCEEDINGS? the process of PPIRP can of CIRP proceedings can
be made by only corporate be filed by –
debtors with consent of 1.Financial creditor
uninterested financial 2.Operational creditor
creditors. 3. Corporate debtor
MANAGEMENT CD's management is CD's management is
controlled by the corporate controlled by the
debtor only hence the insolvency professional
debtor-in – possession and hence the insolvency
and creditor – in – control professional -in –
possession and creditor –
in – control
RESOLUTION Corporate applicant has Resolution plan is
PLAN first chance to furnish prepared through public
base resolution plan with process and this choice is
approval of financial within the hands of RA
creditors. Therefore, the i.e., public whosoever
priority is always given applied for presenting
to promoters. Secondly, resolution plan.
there is option of Swiss
challenge which means
objections to be raised by
remaining CA.
INFORMATION Draft of info. Responsibility to prepare
MEMORANDUM Memorandum is drafted info. Memorandum and
AND LIST OF by CD on their own but list of claims is with RP
CLAIMS final decision is taken by assisted by CoC.
RP after verification of
same.
PUBLIC It is done under Form P9 Form A for public
DECLARATION but only mere declaration is considered
disclosure and not as announcement to
calling upon claims. invite claims and
disclosure
both.
TIME LIMIT It needs to be finished This procedure is
within 120 days after concluded within 180
commencement of days after initiation of
process and there is no proceedings but on
provision for extension application filed by RP,
of this time period. time limit can be extended
to 330 days if consented
by CoC.
MORATORIUM Start of moratorium Proper moratorium period
period is when the starts initially from date
process of PPIRP is when plea is filed halting
commenced, however, the functioning of CD.
essential services by CD
are still in progress which
favours
proper functioning of CD.
WITHDRAWAL It can be withdrawn after It can be withdrawn by
AND RESULT OF minimum 66% of CoC virtue of section 12 A with
TERMINATION agreed upon same and 90% vote affirmation by
once the process is CoC and such
terminated CD can either termination will result in
go for liquidation process form of liquidation of CD
or initiating CIRP. under
section 33 of code.
COOLING OFF The cooling off period The cooling off period
PERIOD required between two requirement between two
consequent PPIRPs is that consequent CIRPs is that
of 3 years. of 12 months
TABLE 3: COMPARISON BETWEEN PROVISIONS OF PPIRP AND CIRP163
Pre-pack could be an intentional agreement between indebted individuals and lenders
to resolve stress. The state of stretch, whether reflected in default or not, ought to not
matter for start of prepack. A few purviews empower utilization of pre-pack for
determination of stretch earlier to default, as initiation of process at earlier level of
stretch limits the plausibility of liquidation. In “July 2021”, Ministry of Corporate
Affairs also presented a “Report on Pre-Pack Insolvency Resolution Process”164. The
victory of the pre-pack pivots upon the co-operation and dynamic interest of the CD,
163
Table 3 is made author with reference to provisions of CIRP and PPIRP under law
164
MCA (2021), Report on pre-package insolvency resolution process, July 2021 available at
https://ibclaw.in/wp-content/uploads/2021/08/Report-of-the-Insolvency-Law-Committee-on-Pre-
Packaged-Insolvency-Resolution-Process-July-2021.pdf (Last visited on 30/7/21)
its promoters, administration, and Board of Executives within the prepare. However,
no two procedures - pre-pack and CIRP - within the Code might run simultaneously
in parallel. In this way, where a CD is experiencing CIRP, it ought to have no plan of
action to pre-pack. Additionally, where a pre-pack is on, there is no way back to
CIRP ought to not be accessible, because it has assent of larger part of uninterested
FCs.
CHAPTER IV- PRE-PACKAGED
INSOLVENCY RESOLUTION PROCESS:
INTERNATIONAL PRESPECTIVE
Pre-pack indebtedness resolution regime isn't a novel and one-of-a-kind concept in

India, this pre-pack term advanced from the western world which is also
incorporated UNCITRAL, European nations, USA, UK, Singapore etc. In spite of
the fact that title 'pre-pack' is unprecedented and not consistent, numerous nations
have diverse names for the same strategy. Such as “UNCITRAL” calls PPIRP as
“expedited reorganization procedures”, “pre-plan sale” in US and “pre-pack sale” in
UK. According to IMF, there are two kinds of pre-packages which includes pre-
packaged plans, where both the arrangement and voting for the arrange take place
prior to initiation of the restoration method and assent of the court is required and other
is pre-negotiated plans, where the plan is negotiated earlier to commencement but
formal voting takes put once the procedures have started. 165 During resolution, a
vexed company and its lenders arrange the terms of an insolvency resolution arrange
and initiates the formal insolvency process, which allows judicial proceedings to be
actualized at most extreme speed166. The foremost predominant frame conceives a
resolution plan, which is arranged and concluded between the lenders and the
indebted person prior to initiation the of statutory procedures under law.167
In Singapore, the pre-pack is known as scheme of arrangement and is applied by the

virtue of “Section 211I of the Companies Act” which enables the court for giving assent
settlement or negotiation. Where any settlement or any course of action is proposed
between a co. and its lenders or any class of those leasers, if any application is made to
the court by the co. regarding such arrangement, indeed in spite of the fact that no
assembly of the creditors or course of lenders has been requested. Course of action is
authoritative on the company and the creditors implied to be bound by such
compromise. If court is in favour of such course of action and court is ensured that
165
International Monetary Fund (1999), Orderly & Effective Insolvency Procedures available at
https://www.imf.org/external/pubs/ft/orderly/ (Last visited on 30/7/21)
166
Vanessa Finch, Corporate Insolvency Law Perspectives and Principles (Cambridge University
Press, 2009)
167
Jose Maria Garrido, World Bank Group, Out-of-Court Debt Restructuring (World Bank Studies),
(World bank publications ,12 January 2012)
meeting of the creditors has been summoned and all essentials under section 210(3AB)
(a) and (b) have been fulfilled. However, exceptionally wide range of power and
discretion is given to the court forgiving assent to scheme of arrangement indeed in the
event that no assembly of lenders is held to look for their vote. The arrangements
relating to course of action have been moved to the Insolvency, Restructuring and
Dissolution Act, 2018, which was enforced from 30th July, 2020. Similar to India, due
to the pandemic situation, Singapore government brought The Insolvency,
Restructuring, and Dissolution (Amendment) Bill, 2020 168 also proposes to introduce a
modern pre-pack scheme for MSMEs. After acceptance of the scheme co. will
automatically go to moratorium period. No, prior meeting of creditors of co. is required.
Instep, the court can favour the scheme, given that the company have to ensure that
2/3rd of the lenders must have been in favour of proposed scheme.
Even in South Korea, the pre-pack was introduced back in 2016 in form of amendment
of section 223169 Debtor Rehabilitation and Bankruptcy Act of Korea at the same
time when IBC, 2016170 was introduced in India and it was inspired from Chapter 11
of US Bankruptcy Reform Act, 1978. Under this act when there is agreement between
debtor and creditors of having out-of-court settlement as pre-packaged plan. It is
hybrid process which combines both formal and informal processes. and till now one
case has been recorded for assent of the Seoul Bankruptcy Court. 171 Even Belgian law
introduce pre-pack on 26 March 2021 until 30 June 2021 by virtue of amendment via
new “Article XX.39/1 CEL”.172 This chapter will deal with international perspective
of pre-pack insolvency resolution by discussing UNCITRAL guide to insolvency law
, pre-pack in US and UK and then about recently published report of working group
V (Insolvency law ) on work of 58th session in New York via online mode and check
if there are any similar provision in pre-pack of India.
168
Insolvency, Restructuring, and Dissolution (Amendment) Bill, 2020 available at
https://sso.agc.gov.sg/Bills-Supp/36-2020/Published/20201005?DocDate=20201005 (Last visited on
30/7/21)
169
Debtor Rehabilitation and Bankruptcy Act, 2016 (Act No. 14177 of 2016), s.223 available at
https://elaw.klri.re.kr/eng_mobile/viewer.do?hseq=46315&type=new&key= (Last visited on 30/7/21)
170
The Insolvency and Bankruptcy Code 2016 (Act No. 31 of 2016)
171
Allen and Overy, Restructuring Across Borders Korea: corporate restructuring and insolvency
procedures, December 2017
172
Thales Mertens, Introduction of a pre-pack insolvency procedure in Belgium, Allen and Overy, 30
March 2021
4.1. EXPEDITED REORGANIZATION PROCEEDINGS (UNCITRAL)173
UNCITRAL employed the term ‘expedited rearrangement proceedings' instead of pre-

packaged insolvency resolution process as these procedures take after the process of
revamping, but on an assisted premise, combining intentional rebuilding
negotiations, where a plan is arranged and concurred to by the larger part of influenced
lenders, with reorganisation procedures commenced within the bankruptcy law to get
court affirmation of the arrange in arrange to tie disagreeing leasers. Reorganization
concurring to Legislative Guide174 can be of two sort one within the frame of formal
procedures i.e., “full reorganization proceedings” and other is voluntary
restructuring arrangements that take place earlier to commencement, where the
insolvency law grants the court to assist the conduct of those proceedings therefore
known as “expedited reorganization proceedings”.
Coming to assenting through deliberate rebuilding transactions is often impeded by the

capacity of person creditors to require requirement activity and by the require for
consistent bank assent to change the reimbursement terms of certain existing classes of
obligation. These problems are amplified within the context of complex,
multinational businesses, where it is especially difficult to obtain consent from all
pertinent parties. To supply a arranging system that can be concurred by all members
and encourages the effective result of these negotiations, “INSOL Universal”
distributed a “Statement of Standards for a Global Approach to Multi-Creditor
Workouts”. The Standards are outlined to expedite arrangement and increment the
prospects of victory by providing guidance to differing groups of lenders
approximately how to continue on the premise of some common concurred rules.
However, the CIRP proceedings in Indian insolvency regime can be considered as

the “full reorganization proceedings” as per UNCITRAL (legislative guide for
insolvency law) mentioned the reason why “expedited reorganization proceedings”
(similar to pre- pack insolvency resolution process) was introduced as follows-
173
Author derived reference from Chapter IV of UNCITRAL legislative guide on insolvency law
published in New York to provide guidelines for expedited reorganization proceedings.
174
UNCITRAL, Legislative Guide on Insolvency Law, Chapter IV pg.238-247, (United Nations
Publication Sales No. E.05.V.10, New York, 2005) available at
https://uncitral.un.org/sites/uncitral.un.org/files/media-documents/uncitral/en/05-80722_ebook.pdf
“Under most existing legal systems, such a modification of
contractual rights requires the commencement of full reorganization
proceedings under the insolvency law, involving all creditors and
requiring satisfaction of the provisions of the insolvency law
governing the conduct of such proceedings. Typically, timing is
critical in business restructuring and delay usually inherent in full
reorganization proceedings can frequently be costly or even fatal to
achieving an effective solution. These difficulties, as well as some
of the costs, delays and procedural and legal requirements often
associated with full reorganization proceedings, can be avoided
where voluntary restructuring negotiations and expedited
reorganization proceedings are used. These proceedings can
provide a cost-efficient means of resolving a debtor's financial
difficulties, voluntary restructuring negotiations and expedited
reorganization proceedings can be valuable tools in the range of
insolvency solutions available to a country's commercial and business
sector. Encouraging the use of such solutions need not stem from the
fact that a country's formal insolvency system is poor, inefficient or
unreliable, but rather from the advantages such solutions can offer
as an adjunct to purely formal insolvency proceedings, which
deliver fairness and certainty. Moreover, such solutions work best
where there is the possibility that if the negotiation process cannot be
started or breaks down, there can be swift and effective resort to the
insolvency law.”175
It is alluring that assisted reorganization procedures be accessible on the application

of any indebted person that's not however qualified to commence proceedings under
the common reorganization arrangements of an insolvency law, but is likely to be for
the most part incapable to pay its obligations within the future as they develop.
Including provisions in an insolvency law that allow such debtors to commence sped
up procedures recognizes the have to be address budgetary trouble at an early stage
and permits advantage to be taken of an intentional rebuilding agreement that a larger
part of influenced banks has affirmed. Commencing “expedited proceedings” will
guarantee the security of contradicting leasers beneath the insolvency law. The
jurisdictional prerequisites for the most part pertinent to commencement of
indebtedness procedures would moreover apply.
An insolvency law may moreover give that assisted procedures to affirm a

deliberate rebuilding understanding are accessible to an indebted person that is
already qualified to commence full procedures within the bankruptcy law. Where
the insolvency law
175
E.05.V.10, New York, 2005) available at https://uncitral.un.org/sites/uncitral.un.org/files/media-
documents/uncitral/en/05-80722_ebook.pdf (Last visited on 31/7/21)
builds up a commitment to commence bankruptcy proceedings if the indebted person
meets indicated criteria concerning its money related position t. On the other hand,
the insolvency law may give a transitory ban that will empower the indebted person
to avoid assembly those criteria and, in this way, maintain a strategic distance from
the sanctions for disappointment to meet the commitment to apply for
commencement, whereas still taking activity to resolve its money related troubles. Sorts
of commitment ordinarily included in voluntary restructuring transactions relate to
borrowed cash obligation, both organization and open, whether secured or
unsecured, and other comparative financial obligations. The particular commitments
to be affected in any given case would be those distinguished within the plan that's to
be confirmed by the court in expedited proceedings.176
According to Legislative Guide on insolvency law, it is pointed out that insolvency law
is not applied as it is when the proceedings are expedited in nature –
“Provisions of the insolvency law that might not apply to expedited

proceedings or might be modified to comply with the goal of
expedited proceedings would include those relating to appointment
of the insolvency representative, unless the plan specifically provides
for that appointment; submission and verification of claims;
requirements for notice to unaffected creditors; time periods for
plan approval where such provisions are included in the insolvency
law; and voting on the plan since this occurred before
commencement. A further and important exception to the
application of the insolvency law would be that, where it could be
shown that confirmation of the plan was likely, the court could
authorize creditors not affected by the plan to continue to be paid in
the ordinary course of business.”177
The application could include the arranged plan and divulgence articulation; data
concerning the settlements that have as of now been conducted counting the individuals
of any bank committee which will have been shaped to encourage the arrangements,
the pre-commencement sales of lenders and voting of affected classes of lenders prove
that unaffected creditors continue to be paid within the conventional course of
commerce which the arrange does not adjust or influence their rights; as well as the
securities managed beneath the arrange to contradicting lenders within accepting
176
177 UNCITRAL, Legislative Guide on Insolvency Law, pg.242, (United Nations Publication Sales
No. E.05.V.10, New York, 2005) available at https://uncitral.un.org/sites/uncitral.un.org/files/media-
66
classes. Impacts of commencement of expedited procedures will for the most part be
constrained to the indebted person and person or classes of leasers and value holders
whose rights are to be adjusted or affected by the arranged arrange. There may be
circumstances, in any case, where the court may decide that extra leasers or classes
of lenders should be included in those impacts in arrange to guarantee, for
illustration, security of the insolvency bequest.
According to Indian insolvency regime after termination of PPIRP proceedings, the CD

becomes eligible for CIRP proceedings and similarly “expedited reorganization
proceedings” after termination can become “full reorganization proceedings”, the
legislative guide stated –
“While the consequences of failure of implementation of a plan

confirmed by the court in expedited proceedings might generally be
expected to be the same as in the case of full reorganization
proceedings, the possibility of commencing expedited proceedings
before a debtor can satisfy the commencement standard for full
reorganization proceedings suggests that conversion to liquidation
might not be appropriate; it may be preferable for the insolvency
law to leave creditors free to pursue their rights at law.”178
In matter of availing to full benefit of the arranged plan and dodge the delays that
may make that arrange inconceivable to actualize, an indebtedness law may need to
consider how, in expansion to recognizing the steps that have been completed before
commencement as famous over, sped up procedures can be handled more rapidly
than full reorganization procedures.
The objectives of expedited reorganization proceedings are specified in the

legislative guide to insolvency law as follows-
“(a) To recognize that voluntary restructuring negotiations, which

typically involve restructuring of the debt due to lenders and other
institutional creditors and major non-institutional creditors where
their participation is crucial to the restructuring, but not involving
all categories of creditor, is a cost-effective, efficient tool for the
rescue of financially troubled businesses;
(b) To encourage and facilitate the use of informal negotiation;
(c) To develop a procedure under the insolvency law that will:
(i) Preserve the benefits of voluntary restructuring negotiations where
a majority of each affected class of creditors agree to a plan;
178
67
(ii) Minimize time delays and expense and ensure that the plan
negotiated and agreed in voluntary restructuring negotiations is not
lost;
(iii) Bind those minority members of each affected class of
creditors and equity holders who do not accept the negotiated plan;
(iv) Be based upon the same substantive requirements, but
shortened time periods, as reorganization proceedings under the
insolvency law, including essentially the same safeguards; and
(d) To suspend, with appropriate safeguards, requirements in other
laws that may prevent or inhibit the use of processes that delay the
invocation of the insolvency law.”179
UNCITRAL through its legislative guide for insolvency law provides for “expedited
reorganization proceedings” which is equivalent to pre- pack insolvency resolution
process in India and basic structure of Indian pre-pack in its very nature is taken
from framework provided in the guide and it emerged as one of the inspirations in
modification of PPIRP and helping it evolve.
4.2.PRE-PLAN SALE IN USA

On the off chance that a company in budgetary trouble may be a US co., or has adequate
contact with the US to fulfil the jurisdictional predicates of the US Liquidation Code,
that company will have access to a pre-packaged arrange prepare that's likely the
foremost completely developed and advanced within the world. Pre-packaged
Chapter 11 cases have been broadly utilized within the Joined together States since
the late 1980s and have gotten to be ever more predominant within the final 10 years.
The close four decades of encounter that has brought about has given the US bar and
seat the opportunity to refine the administering standards for pre-packaged Chapter
11 cases. The US Bankruptcy Code encourages three forms of pre-packs,
specifically, pre-plan deals under section 363180, pre-packaged liquidation procedures
and pre-arranged liquidation proceedings under Chapter 11 181. Pre-plan sale under
Chapter 11 cases have their origins in 19th-century equity receivership practice 182.There
are three kinds of pre- pack generally in simple terms -single track, dual track and
partial pre-pack. However, in a landmark case it was decided that section 363 does
not applies to prepack sale-
179
180
US Bankruptcy Code, Chapter III, TITLE 11—BANKRUPTCY, s.363, this title was enacted by
Pub. L. 95–598, title I, §101, Nov. 6, 1978, 92 Stat. 2549 available at
https://www.govinfo.gov/content/pkg/USCODE-2011-title11/pdf/USCODE-2011-
title11.pdf (Last visited on 1/8/21)
181
US Bankruptcy Code, Chapter III, TITLE 11—BANKRUPTCY, this title was enacted by Pub. L.
95–598, title I, §101, Nov. 6, 1978, 92 Stat. 2549 available at
https://www.govinfo.gov/content/pkg/USCODE-2011-title11/pdf/USCODE-2011-title11.pdf
182
Henry J. Sommer and Richard Levin, Collier on Bankruptcy (Mathew Bender elite products, Vol II -
68
VIII, New York, 2013)
68
“In In re Ditech Holding Corp.183, the U.S. Bankruptcy Court for
the Southern District of New York addressed several objections to
confirmation of a chapter 11 plan that proposed to sell home mortgage
loans "free and clear" of certain claims and defenses of the
homeowner creditors, contrary to a provision of the Bankruptcy
Code—section 363(o)—which was enacted in 2005 to prevent free
and clear sales of certain claims and defences relating to consumer
credit agreements. The court ultimately ruled that section 363 of the
Bankruptcy Code does not apply to sales in a chapter 11 plan and that
the debtors proposed their plan in good faith.”184
Pre-plan deals is to some degree comparable to pre-pack deals in UK. It permits a
bankruptcy trustee, comparable of director in UK, to offer all or considerable resources
of a CD once it enters rearrangement procedures. It requires the indebted person to grant
a take note to every interested party, to supply them an opportunity to question to the
proposed exchange and obtain the assent of the liquidation court to guarantee that such
deals are made transparent and just during conventional course of trade. The law
does not prescribe either any benchmarks or rules that direct legal assessments of
pre-plan deals or the mode in which a deal. Appropriately, courts have authority in
matter of adjudicating the applications and deal regularly includes an open sell off
and a public deal process. Owing to the adaptability in strategy, stalking horse185
strategy is frequently utilized for conducting deal.
Within the case of pre-packaged liquidation continuing, the CD comes to an
understanding on the terms of a arrange with key leasers and requests assent of the
assertion from particular classes of creditors. It circulates the arrange with a divulgence
articulation to all leasers. With the requisite votes in support of the arrange, the CD
records a Chapter 11 request. Within the case of pre-arranged (also known as pre-
negotiated) liquidation process, when CD comes to an assertion with its key creditors
but does not circulate the arrange or request genuine votes on the plan earlier to
recording Chapter 11 request. The sales of votes and affirmation of the arrange are
looked for after recording. In either proceeding, the arrange must be acknowledged
by each lesson of impeded parties with at slightest 2/3 rd in sum and more than fifty
percent in number tolerating the arrange.
183
In re Ditech Holding Corp., 2019 WL 4073378 (Bankr. S.D.N.Y. Aug. 28, 2019)
184
Section 363 Does Not Apply to Chapter 11 Plan Sales, Jones Day insight, December 2019 available
at https://www.jonesday.com/en/insights/2019/12/section-363-does-not-apply (Last visited on 1/8/21) 185
A stalking horse offer, understanding, or form of bidding may be a offered for a bankrupt firm or its
resources that's orchestrated in progress of an sell off to act as an effective save offered. The aim is to
maximize the esteem of its resources or maintain a strategic distance from cut-price offers, as portion
of a court sell off.
69
FIGURE 6: PRE-PLAN SALE INITIATION USA 186
Where the desired majority has voted in support of the arrange, the course is
regarded to have acknowledged it, making it authoritative on all parties within the
course. The interested parties, whose interface are not disabled by the plan, are also
deemed to have accepted it. A course of interested parties, whose individuals don't get
or retain any assets within the plan is considered to have rejected the arrange. The plan
recorded with Chapter 11 petition is affirmed by the court subject to compliance with
the stipulated disclosure requirements. Once a rearrangement plan is affirmed by the
liquidation court, it ties all claimants regardless whether they exclusively voted in
support of it or not. The debtor's obligations to leasers earlier to the arrange are
supplanted with those listed within the arrange.
FIGURE 7: PRE-PLAN SALE PROCEDURE USA 187
186
Gibson Dunn, Getting Ready for the Next Cycle: Pre-packaged and pre-negotiated Chapter 11
Reorganization Strategies April 25, 2019 available at https://www.gibsondunn.com/wp-
content/uploads/2019/05/WebcastSlides-Getting-Ready-for-the-Next-Cycle-Prepackaged-and-
Prenegotiated-Chapter-11-Reorganization-Strategies-25-APR-2019.pdf(Last visited on 1/8/21)
187
Gibson Dunn, Getting Ready for the Next Cycle: Pre-packaged and pre-negotiated Chapter 11
Reorganization Strategies April 25, 2019 available at https://www.gibsondunn.com/wp-
In article, “Pre-packaged Chapter -11 in USA: An Overview” the advantages of pre-
packaged Chapter 11 case were pointed out.
“They include –
 Certain outcome and shorter duration of case
 Retention of the control
 Lower administration costs
 Ability to bind holdout
 Tax advantages
 Advantage to co. conferred on debtor by Bankruptcy Code”188
Two basic essentials are required for chapter 11 case of pre-pack which are approval
by court retroactively and adequate information is to be given under disclosure
statement under section 1125(a) of title 11 189 and another procedural requirement are
also needed to be fulfilled. Generally, pre-pack chapter 11 can be confirmed within
30 days of filing the application. However, it could take 53 days as in In Re True
Temper Case190 or even 19 hours like in In SunGard Availability Services Capital
Case191. If there is no consensus to pre-packaged plan the pre-negotiated plan is taken
to be other alternative.
Indian pre-pack is made on same lines and contains elements of both pre-packaged and
pre-negotiated plan, it requires prior resolution plan, short time limit however more
than USA pre-plan sale. All-important disclosures of information and approval of the
court (here in India AA i.e., NCLT) after consensus among creditors of CD. Both are
following DIP model.
4.3.PRE-PACK SALE IN UNITED KINGDOM

The Insolvency Act, 1986192, did not give for or direct pre-pack, which has created
out of advertise hone through commerce and proficient development, in spite of the
fact that Courts have supported the advancement. It is commonly utilized as a
methodology
content/uploads/2019/05/WebcastSlides-Getting-Ready-for-the-Next-Cycle-Prepackaged-and-
Prenegotiated-Chapter-11-Reorganization-Strategies-25-APR-2019.pdf(Last visited on 1/8/21)
188
Dennis F Dunne, Dennis C O' Donnell and Nelly Almeida (Milban LLP), “Pre-Packaged Chapter
11 in USA: An Overview”, Global Restructuring Review, 11 December 2019
189
US Bankruptcy Code, Chapter III, TITLE 11—BANKRUPTCY, s.1125(a), this title was enacted by
Pub. L. 95–598, title I, §101, Nov. 6, 1978, 92 Stat. 2549 available at
https://www.govinfo.gov/content/pkg/USCODE-2011-title11/pdf/USCODE-2011-title11.pdf (Last
visited on 1/8/21)
190
In Re True Temper Sports Inc. No. 09 -13446 (PJW) (2009)
191
In Re SunGard Availability Services Capital Inc. No. 19-22915 (ROD) (2019)
192
The Insolvency Act, 1986 (1986 Chapter 45) available at
https://www.legislation.gov.uk/ukpga/1986/45/pdfs/ukpga_19860045_en.pdf (Last visited on 1/8/21)
for offering a commerce as a going concern, by using administrator's control to offer a
company's resources without assent of the creditor. Ordinarily, it initiates with the co.
settling to name an insolvency practitioner (IPR) as an Advisor, with the understanding
that conceivably he would be named as the Administrator. Once the terms of deal are
concurred, the indebtedness specialist is authoritatively designated as the Administrator
and the deal is concluded promptly taking after his arrangement. Be that as it may,
the hone threw up concerns such as straightforwardness and responsibility, especially
when deal is made to a connected party or where there's a struggle of intrigued of the
IPR. To address the concerns, Insolvency Practitioners Association issued Statement
of Insolvency Practice 16193 (SIP) in 2009 to direct pre-pack through direction of
Administrator.
The proceeded concern relating to pre-pack deals driven to commissioning Ms.
Teresa Graham194 to carry out an autonomous survey. The Graham Audit, concluded
in 2014, and highlighted the need of transparency around pre-pack deals for
unsecured banks, especially in case of deal to a connected individual and ‘serial pre-
packing'. To point out the concerns, it prescribed a set of voluntary measures, which
included the foundation of a gather of experienced business people, called pre-pack
pool, to supply a supposition on a pre-pack deal, and advancements to marketing and
valuation necessities and supply of data to leasers. The SIP195 adopted these
deliberate measures in November, 2015. At the same time, the Insolvency Act,
1986196, was amended to enable the Government to control, inside the another
coming five years, pre-pack sale to connected people. The said control lapsed in May,
2020, some prior to its utilization. The Corporate Insolvency and Governance Act,
2020197, restored it given it is worked out some time recently the conclusion of June,
2021.
SIP characterizes pre-pack sale as a course of action due to which the sale of all or
portion of a co.'s commercial status or resources is arranged with a buyer earlier to the
nomination of an Administrator and the Administrator impacts the deal instantly on, or
in the blink of an eye after, such nomination. The hole between the nomination of the
Administrator and the ensuing deal of the business can be a matter of hours, as each
193
Statement of Insolvency Practice 16 (2009) available at https://insolvency-
practitioners.org.uk/uploads/documents/f30389ce35ed923c06b2879fecdb616a.pdf (Last visited on
1/8/21)
194
Teresa Graham (2014), Graham Review into Pre-pack Administration, June
195
196
197
Corporate Insolvency and Governance Act ,2020(2020 Chapter 12)
subtle elements of the deal is concluded earlier to the appointment. SIP 16198 supports
a set of rules for administrators to ensure straightforwardness and objectivity though
entering a pre-packaged bargain. Since an Administrator is essentially required to
protect the co. itself, he needs to record the reasons for selecting for a pre-pack sale
considering other options accessible. He is obliged to supply a point-by-
point disclosure statement to lenders clarifying why pre-packaged deal has
been embraced and demonstrating how he has acted with due respect to their interface.
This divulgence statement, which is sent to Bankruptcy Service, requires
the Administrator to supply subtle elements of:
 The buyer and whether any related or associated party of dealer was included in the
transaction
 the resources sold
 The deal consideration gotten
 How the valuation of the trade resources was chosen.
In the event that a pre-packaged deal includes a related or associated party, it ought
to be embraced by a part of the pre-pack pool 199 that assesses whether the deal is
reasonable or not. Be that as it may, looking for conclusion of pre-pack pool is
deliberate and a negative conclusion from the pool does not cruel that a pre-pack deal
cannot be made. On the off chance that the Director chooses to continue with the
associated party deal, he must clarify to the leasers why he feels the deal is appropriate,
given the conclusion of the pool. Whereas the method does not require any endorsement
of the court or banks, in hone the company and IPR broadly counsel the secured
creditors.
Procedure of pre-pack administration in UK is as follows –
“STEP- 1: Take advice from IPR eligible to do pre-pack

administration
 Advice must be in writing to board and bank
 New SIP 16 rules discuss the availability of all options
 If BOD decides to go with pre-pack the resolution is passed
 Such resolution will appoint advisors, IPR, Accountants etc.
STEP- 2: Prepare the business plan for new co. and to guarantee
acquirer copies of info. Of management and accounts from buyer will
be given to IP
STEP- 3: If there is any issue with the compliance of pre-pack
regulation then it is restored
198
199
Pre -pack pool available at https://www.prepackpool.co.uk/about-the-pool (Last visited on 1/8/21)
STEP- 4: Acquisition is financed and detailed plan disclosed need
by them. However, personal guarantee is also need in case of director
of SME.
STEP- 5: Pre-pack process initiated after all compliance, formal
contract is signed and proposed administrator is appointed and final
application is made to court and business is sold to new co. or 3 rd
party immediately.”200
There is also scope of disagreements between stakeholders with regards to pre-pack

sale such as choice of IPR or unfair procedure, following principle of Audi Alterum
Partum, opportunity to be heard is given to them and they can challenge pre-pack sale.
“In Re Vegas Investors LLC case201 the applicants were creditors of VE Interactive who
brought a claim against the administrators to challenge the pre-packaged sale of the
company to the directors for £1.75 million. The creditors asked for the administrator to
be replaced. Without determining whether the proposed sale was legitimate or not,
the court found that there was a serious issue for investigation by an independent party
into whether the proposed sale was in the best interest of the company and whether
the administrator had breached his or her duty in agreeing to the terms of the
sale.”202
FIGURE 8: PROCESS OF PRE-PACK OF HYPOTHETICAL CO. IN

UK203
200
Pre-Pack Administration Process and Procedures, Company rescue guide available at
https://www.companyrescue.co.uk/guides-knowledge/what-is/pre-pack-administration-process-and-
procedures/ (Last visited on 1/8/21)
201
In Re Vegas Investors LLC & others v. Henry Shinners, Finbarr O'Connell and others (2018)
EWHC 186(Ch)
202
Yushan Ng and Jacqueline Ingram (Milbank LLP) “United Kingdom: Core Elements of a Pre-Pack
Administration”, Global Restructuring Review, 11 December 2019 available at
https://globalrestructuringreview.com/guide/the-art-of-the-pre-pack/edition-1/article/united-kingdom-
core-elements-of-pre-pack-administration#footnote-006 (Last visited on 1/8/21)
203
Pre-Pack Administration Process and Procedures, Company rescue guide available at
https://www.companyrescue.co.uk/guides-knowledge/what-is/pre-pack-administration-process-and-
procedures/ (Last visited on 2/8/21)
On a survey of viability of intentional measures presented in 2015, the UK Government
observed the constrained utilize of the pre-pack pool outlined to grant certainty to
leasers and other stakeholders that an associated party pre-pack deal is suitable. It has
proposed to introduce new controls to require examination of pre-pack deals to
associated parties, to construct on the existing voluntary measures and to relieve any
unfavourable results within the expanded utilize of pre-pack deals emerging from the
widespread COVID -19204. In this way, the pre-pack which begun as a casual
arrangement between the parties is slowly getting controlled to address the rising
concerns.
Indian legal system is derived from common law of England. Even, pre-pack of India
is also similar to pre-pack sale of UK. Like in UK insolvency practitioner is
appointed similarly in India insolvency professional is chosen. Similar, prior
agreements are required to initiate pre-pack proceeding in both the countries and if
no disagreements are there then finally pre-pack is initiated. Even time period is
short for pre-pack of both the countries. However, in UK it is much shorter and
proceeding is completed up to 4-10 weeks.
4.4. REPORT OF WORKING GROUP V (INSOLVENCY LAW)

During 54th session, UNCITRAL consented to legislative recommendations on
insolvency of MSMEs. The work of 58 th session of Working Committee V in New York
through online mode in the month of May was taken into consideration and adopted. In
India, due to decline in economic status owing to pandemic situation to make
insolvency proceedings much easier in form of temporary relief measure to recover
financial and economic loss to corporate debtor. Similarly, simplified insolvency
regime was introduced through this session on “22nd July 2021” and it addresses the
concerns of individual entrepreneurs and MSMEs. The features of this simplified
reorganization proceedings as per recommendation of working committee V
commentary which are similar to Indian pre-pack includes –
 Devise a reorganization plan much as resolution plan is devised under Indian
prepack and appointment of independent profession which is similar to
insolvency professional in India
“The insolvency law providing for a simplified insolvency regime
should allow the competent authority to appoint, where necessary, an
204
Insolvency Service (of UK) (2020), Pre-pack sales in administration report, October
independent professional to assist the debtor with the preparation of
the reorganization plan or decide that circumstances of the case
justify entrusting the preparation of the plan to an independent
professional.”205
 Similar shorter time period in both the insolvency procedures

should fix the maximum time period for the proposal of a
reorganization plan after commencement of a simplified
reorganization proceeding and authorize the competent authority,
where the circumstances of the case so justify, to establish a shorter
time period subject to its possible extension up to the maximum
period specified in the law.”206
 Reorganization plan much as resolution plan in India need to be assented by the

creditors
“Undisputed reorganization plan
The insolvency law providing for a simplified insolvency regime
should specify that the plan is deemed to be approved by creditors
if the requirements under recommendation is fulfilled.
Disputed plan
The insolvency law providing for a simplified insolvency regime
should:
(a) Allow the modification of the plan to address objection or
sufficient
opposition to the plan;
(b) Establish a short time period for introducing modifications
and transmitting a modified plan to all known parties in interest;
(c) Require the competent authority to transmit any modified plan to
all
known parties in interest indicating a short time period for expressing
any objection or opposition to the modified plan;
(d) Require the competent authority to terminate the simplified
reorganization proceedings for a solvent debtor or convert the
simplified reorganization proceeding to a simplified liquidation
proceeding for an insolvent debtor
(i) if modification of the original plan to address objection or
sufficient opposition is not possible or
(ii) if objection or sufficient opposition to the modified plan is
communicated to the competent authority within the established time
period; and
205
Working Group V (Insolvency Law), Report on Work Of 58th Session (New York (Online) 4-7 May
2021), Pg. No. 30 available on
https://uncitral.un.org/sites/uncitral.un.org/files/1052_clean_for_submission.pdf (Last visited on
2/8/21)
206
2/8/21)
77
(e) Specify that the modified plan is approved by creditors if the
competent
authority receives no objection and no sufficient opposition to the
modified plan within the established time period.”207
 Reorganization plan need approval of the competent authority similar to Indian pre-
pack where approval of adjudicating authority is required.
should require the competent authority to confirm the plan
approved by creditors. It should require the competent authority,
before confirming the plan, to ascertain that the creditor approval
process was properly conducted, creditors will receive at least as much
under the plan as they would have received in liquidation, unless
they have specifically agreed to receive lesser treatment, and the
plan does not contain provisions contrary to law.”208
 In both the proceedings of Simplified reorganization proceedings and Indian PPIRP

independent professional and for latter insolvency professional acts as watch dog
for proper implementation of the plan.
may entrust supervision of the implementation of the plan to the
competent authority or an independent professional as applicable.”
 Both UNCITRAL simplified reorganization proceedings and Indian PPIRP

provides for the sanction if provisions are not complied therewith-
should build in appropriate safeguards to prevent abuses and
improper use of a simplified insolvency regime and permit the
imposition of sanctions for abuse or improper use of the simplified
insolvency regime, for failure to comply with the obligations under
the insolvency law and for non-compliance with other provisions of
the insolvency law.”209
As per the UN Information Service “The commentary is expected to be finalized during

the December session of UNCITRAL Working Group V (Insolvency Law) and
207
2/8/21)
208
2/8/21)
209
published together with the Legislative Recommendations under the title “UNCITRAL
Legislative Guide on Insolvency Law for Micro and Small Enterprises” as part five
of the UNCITRAL Legislative Guide on Insolvency Law and as part of the
UNCITRAL MSMEs text series.”210
This chapter discussed the international aspect of pre-packages which was essential
to go through for better understanding of Indian pre-package proceedings under
IBC,2016 and draw its similarities from the proceedings equivalent to pre-pack
regime from the western world and standard model set by UNCITRAL through its
guidelines. However, India not yet is party to those guidelines but incorporated certain
aspects of insolvency law guidelines which are there in Indian bankruptcy and
insolvency regime. Meanwhile, it is also pertinent after discussing pre-pack regime
all over the world that this proceeding offers basic, quick and low-cost instruments
for liquidation and insolvency of non-viable MSEs or reorganization of practical
MSEs, whereas giving shields against conceivable manhandle to the co. through
prepack regimes spread all over.
210
IBC News, UNCITRAL adopts the Legislative Recommendations on Insolvency of Micro and
Small Enterprises, 23 July 2021, https://ibclaw.in/uncitral-adopts-the-legislative-recommendations-on-
insolvency-of-micro-and-small-enterprises/ (Last visited on 2/8/21)
79
CHAPTER V - CONCLUSION AND SUGGESTIONS
Insolvency and bankruptcy code was presented in India in year 2016. However, it
was not that there was no law for liquidation proceeding in case of financial distress as
they were multiple in no. such as “Sick Industrial Co. Act, 1985211 for industrial co. s
and Co. Act, 1956212 contained all the arrangements regarding liquidation and
winding up of all sorts of co. s while for recuperation of obligation we had SARFESI,
2002213 and RDDBFI Act, 1993”214 for financial institutions. So, real advancement of
insolvency law begun when one umbrella law came into drive and in late 2014
“Bankruptcy Law Reform Committee was constituted under chairmanship of T.K.
Vishwanathan” and IBC,2016215 was result of same. Presently, India got as it were one
single law managing with all perspectives of co. in budgetary trouble. Afterward on it
revised and corporate insolvency resolution process stamped its way to development
and presently got to be point of interest in insolvency regime. Amid the widespread
circumstance IBC was suspended which was extended till “25 March 2021”. That
was the time when require of pre-pack insolvency resolution process was realized
and there on IBC is advancing with taking one further step more and introduced
“PPIRP for MSME”.
Chapter 1 set up the fundamental system of the entire thesis and talked about the
research issue under insolvency law and the require of PPIRP. Already, CIRP was pre-
existing under IBC, 2016 it stipulates that “resolution process of focused co. will be
completed in a most extreme of 330 days which before the act was taking around 4.5
a long time to be completed conjointly PPIRP” was presented at first as transitory
cure after suspension of CIRP procedures in widespread circumstance to stabilize
economy and reduce the stress emerged due to point till which co. is at the skirt of
liquidation. Finally, the testing hypothesis of thesis is Pre-packaged insolvency
resolution process under “IBC(Amendment) Bill, 2021”216 is proficient in essence of
speed, time, cost viability and reducing burden on courts. Remaining chapters were
made in lines to check the veracity of the hypothesis.
211
The Sick Industrial Companies (Special Provisions) Act, 1985 (Act No. 1 of 1986)
212
Companies Act, 1956 (Act No. 1 of 1956)
213
The Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act,
2002 (Act No. 54 of 2002)
214
The Recovery of Debts Due to Banks and Financial Institutions Act, 1993 (Act No. 51 Of 1993)
215
Insolvency and Bankruptcy Code, 2016(Act No. 31 of 2016)
216
The Insolvency and Bankruptcy Code (Amendment) Bill, 2021 (Bill No. 104 of 2021)
Chapter 2 fulfils the objective 1 of the thesis that's to study background and
provisions of corporate insolvency resolution prepare under IBC, 2016.This chapter
altogether examine IBC,2016 and distinctive modes of resolution under it and after
that toss light upon provisions of CIRP. The corporate insolvency law is in spite of
the fact that one of most effective and characterized arrangement but with productivity
there are parts of holes which are required to be satisfied while real time execution of
CIRP procedures. Be that as it may, we cannot be allowed to pass into a questionable
delay vanquishing the exceptionally object of the law. In this manner, to fill those
crevices there's still space remains for a few strategies which can be more effective at
that point CIRP being able to enhance clarity, able to decrease deferred equity and
keep the strategy easier than CIRP.
Objective no. 2 that is to analyse the concept of Pre – Packaged Insolvency Resolution
Process and its provisions under IBC(Amendment) Bill 2021 and chapter 3 fulfils this
objective for better understanding of framework of prepack may be a deliberateness
understanding between obligated people and loan specialists to resolve stretch. The
state of stretch, whether reflected in default or not, got to not matter for begin of
prepack. A number of purviews enable utilization of pre-pack for assurance of
extend prior to default, as start of handle at prior level of extend limits the credibility
of liquidation. The triumph of the pre-pack turns upon the co-operation and energetic
intrigued of the CD, its promoters, organization, and Board of Officials inside the plan.
Be that as it may, no two procedures - pre-pack and CIRP - inside the Code might
run at the same time in parallel. In this way, where a CD is encountering CIRP, it got
to have no arrange of activity to pre-pack. Furthermore, where a pre-pack is on, there's
no way back to CIRP got to not be available, since it has consent of bigger portion of
unrelated FCs.
Chapter 4 explore the international point of view of pre-package insolvency
resolution process satisfying objective no.3 of paper. This chapter examined the
worldwide perspective of pre-packages which was fundamental to go through for
superior understanding of Indian pre-package procedures under IBC,2016 and draw
its likenesses from the procedures proportionate to pre-pack administration from the
western world and standard demonstrate set by UNCITRAL through its rules. However,
India not however is party to those rules but consolidated certain viewpoints of
insolvency law rules which are there in Indian liquidation and bankruptcy
administration. In the interim, it is additionally relevant after talking about pre-pack
administration all over the world that this continuing offers essential, speedy and
low- cost disobedient for liquidation and indebtedness of non-viable MSEs or
reorganization of practical MSEs, while giving shields against conceivable abuse to
the co. through prepack administrations spread all over.
Chapter 5 will finally conclude the whole dissertation by fulfilling the last objective
to identify whether Pre-packaged insolvency package resolution process is efficient
enough to become a good alternative besides regular Corporate Insolvency
Resolution Process and suggest ways for filling in gaps within pre-package
insolvency resolution process for better implementation if any.
Pre-packaged insolvency resolution process will be a boon within the upcoming way
of insolvency and liquidation in numerous distinctive ways covering the diverse
aspects. It is as of now well acknowledged reality that IBC is made with considering
the speed as pith and so is pre pack offer. Some of major benefits of PPIRP are -
 Pre-pack combines the ideal attribute of two opposite alternatives so that
insolvency procedures cause minimal disruption to debtors' commerce
exercises by “combining the proficiency, speed, fetched, and adaptability of
workouts with the official impact and structure of formal indebtedness
procedures”217. It offers several advantages as compared to the regular
resolution. Most of these radiate from two elements, specifically,
(a) the informal process
(b) shorter time for closure.
Since the method prior to initiation of formal proceeding is informal, pre-
pack gives the partners flexibility in working out a consensual, but proficient,
methodology for compelling determination and esteem maximisation that
may be troublesome beneath the formal indebtedness strategy. It takes less time
since a substantial portion of the procedures is attempted some time recently
the commencement of the formal proceeding by the court.
 “Speedy Resolution”: It is troublesome to keep a company going on in an
upsetting state for long. If stress isn't settled rapidly, its esteem may disintegrate
and eventually vanish making resolution difficult. Pre-pack, which empowers a
217
Jose Maria Garrido, World Bank Group, Out-of-Court Debt Restructuring (World Bank Studies),
(World bank publication ,12 January 2012)
speedier determination, preserves and boosts esteem and increases the
plausibility of determination.
 “Cost Effective”: Since the method takes less time, the fetched of prepare
connected to time becomes less. Since the CD proceeds with the existing
administration amid pre-pack, it maintains a strategic distance from the cost
of disruption of commerce because it does not shift administration to IRP to
RP and after that to fruitful RA and continues to holds representatives,
providers, clients, and investors. It too spares the taken a toll of IRP/RP to the
degree he does not get to run the trade of the CD as a going concern. Since
the process remains absent from spotlight till the initiation of the formal
prepare, it minimises indirect costs in terms of stigma and misfortune of
notoriety to the trade. As considerable portion of prepack is conducted exterior
the court and the formal portion of the method has least involvement of the
court, the fetched related with interface with a court is decreased.
 “Value Maximisation”: A bothered resource incorporates a life cycle and the
longer it remains in a state of stress, the more esteem exhaustion it endures.
Its esteem depletes assist by the costs related with a longer determination
period. The esteem consumption is exasperated due to the open nature of a
formal insolvency prepare, whereby the notoriety and brand of the CD
endures. Pre- pack preserves value by cutting down these components of the
formal process. Early start and closure of the process as compared to the
formal prepare, limits the plausibility of liquidation and thereby destruction of
economic value in case of something else reasonable businesses. This can be
frequently key to saving small businesses that cannot withstand the costs of a
delayed bankruptcy, and in this manner makes a difference in maximising
esteem. There's prove in a few wards to recommend that the speed and
reduction of formal strategies in pre- packs result in enhancement in
recuperations of at slightest a few classes of creditors.
 “Employment preservation”: A pre-pack may commence at the most initial sign
of trouble; it encourages coherence of its operations without any work
misfortune. “It guarantees a company keeps going, in differentiate to a more
extended formal bankruptcy prepare which dangers losing clients and
employees”. Pre-pack liquidation within the “Netherlands expanded work
maintenance in a company regardless its level of push. The cruel worker
maintenance post conventional liquidation was 34.6% though that of pre-packed
liquidations was 54.1%”218.
 “Group determination”: Given that determination of a gather of companies
can be value-adding as compared to an isolated insolvency proceeding for
each company in trouble, numerous jurisdictions are mulling over to form
accessible an enabling framework for the same219. Within the non-appearance
of any mechanism to successfully bargain with insolvency of a bunch of
companies in most locales, prepacks have demonstrated to be exceptionally
accommodating. “A research shows that the pre-pack deal of the endeavour
gather to a single buyer has come about in a effective determination in around
72% of the cases.220”
 “Lessen the burden of Courts”: The courts more often than not have restricted
infrastructural capacity and can perform its commitments inside its limits. A
pre-pack has the potential to diminish case, due to its informal and consensual
nature. It does not require association of the court amid the casual portion of the
method and requires least part of courts amid formal process. Subsequently, it
reduces case fetched and delays and makes a difference to decongest the
overburdened courts221. It is vital to have a utilitarian out of court rebuilding
proceedings, so that the endless lion's share of cases is restructured out of
liquidation, with the NCLT acting as a court of final resort in the event that
no understanding is conceivable.222
Nothing is absolutely perfect there are some deficiencies in each concept with its
benefits. So, this chapter will also deal with the shortcomings of PPIRP. Each coin has
two sides additionally with a part of benefits of pre pack offer there are too a few
downsides of the same. Newly proposed PPIRP is full of benefits as well as
shortcomings. Some of these major shortcomings are-
218
Henrick Albers et al. (2019), “Does Pre-Packed Bankruptcy Create Value? An Empirical Study of
Post-Bankruptcy Retention in the Netherlands”, International Insolvency Review, 2019
219
IBBI (2019), Report of the Working Group on Group Insolvency, September
220
Peter Walton and Chris Umfreville (2014), Pre-pack Empirical Research: Characteristic and
Outcome Analysis of Pre-Pack Administration, University of Wolverhampton, April, 2014 available at
https://www.gov.uk/government/publications/graham-review-into-pre-pack-administration (Last
visited on 3/8/21)
221
MCA (2018), Monthly Newsletter, November, 2018
222
Abhijit Vinayak Banerjee, What the Economy Needs Now (Juggernaut Books, New Delhi ,2019)
 “Issues regarding transparency” -The nature of pre-pack leads to a need of
transparency prior the deal as the parties work to secure long term of the trade
without taking risks with regards to certainty of creditors, customers and
representatives. it is conjectured that there will be “need of transparency” much
more as compared to CIRP due to casual prepare and private assertions between
monetary leaser and investors. All of this issue will emerge due to need of
legitimate channel and no open offering prepare which eventually comes
about in need of reasonable treatment to OC. So, less finance will be returned
to the creditors due to deficiently promoting. There will be no obligation
towards modern company and lawful duty will as it was be owed to the
creditor of previous business by IP. “Manoj Kumar” (Corporate Professionals
Law Firm Partner) also stated while giving interview to Indian Express that -
“There may be questions of whether secured lenders have been fair
to other creditors while also noting that bankers themselves may
hesitate to restructure liabilities outside of an open bidding process
for fear of their decisions leading to investigations by agencies
unlike in the case of a full-fledged CIRP which allows for price
discovery, in the case of a pre-pack the NCLT would only be
able to evaluate a resolution plan based on submissions by the
creditors and the investor.”223
 “Inadequate marketing” - The quality of showcasing of businesses that

proposed to pre-pack has to progress. It appears that where no showcasing is
carried out pre-packs return less cash to creditors.
 “Inefficient management” - It is pertinent that widest reasons for financial
distress emerging from inefficient administration. Though giving a proficient
and magnanimous component to supply help to divisions profoundly affected
from covid pandemic is exceptionally praiseworthy, consideration of business
substances enduring due to wasteful administration raises eyebrows. It makes
“no viable sense to proceed with such inefficient management without
bringing a transformative alter to restore the fortunes of the co. in issue.”
 “Role of RP” - Prepack administration rethinks the part RP to a manager and
eyewitness compared to a CIRP. Be that as it may, the determination proficient
223
Manoj Kumar (Corporate Professionals Law Firm Partner) interview to Karunjit Singh, what are
pre-packs under the present insolvency regime? Indian Express, July 28, 2020,
https://indianexpress.com/article/explained/insolvency-and-bankruptcy-code-pre-packs-explained-
6527116/ (Last visited on 3/8/21)
is still anticipated to require autonomous valuation from two valuers, carry
out the test of evasion and test the qualification within section 29A 224. This
postures “genuine common-sense obstructions for the determination
proficient to carry out shirking tests when the CD directs administration
control in the midst of exceptionally forceful timelines of 90 days.”
 “Back door transactions for resolution plan due to informal nature”- The
reference to private and private process of welcoming determination plans from
promoters and investors to serve as the base plan shows up giving plentiful room
to behind the door transactions and compromise on the free, just and
equitable nature with which CIRP is directly conducted.
 More enumerating is required on this perspective to guarantee not one or the
other the method is manhandled, nor it gets upset due to case from contradicting
lenders. IBC can be a boon for settling speedily with early signs of trouble as
well as bane when ceaselessly this gets to be a door to looking for reductions
from moneylenders and creditors as a characteristic result. “Relationship can
as it were be win-win and not win loose”.
 “Unrealistic time limit”- Prepack alternative spin around exceptionally
improbable timeline of 90 days and taking off ambiguities around defining
the choice to supply help.
After reaching out all benefits and drawbacks of pre-package insolvency
resolution process, to check the hypothesis it is utmost important to compare
PPIRP and CIRP. However, author had already discussed the differences
between procedure of both regular CIRP process and newly inserted PPIRP.
With help of which author tried to deduce benefits of latter through the table
below-
VARIABLE AND CIRP PPIRP

CONCERNS
Transparency More transparent Less transparency
Flexible Less flexibility More flexible than CIRP
Economic Less cost effective More cost effective
Time Consuming More time consuming Less time consuming
224
The Insolvency and Bankruptcy Code, 2016 (Act no. 31 of 2016), s.29 A
Unsettling business activities It causes more disruption to It does not disrupt business
business
Productive- group Less productive and difficult More productive hence easier
insolvency
Value Maximization Maximize value of assets Value maximization through
through full public process reduction in cost
Outcome- probability of Less probability More probability

resolving stress
Role of IP More interference during Only advisory and supervisor
process role
Resolution of stress Post- default stress Pre and post default stress
End outcome in case of Liquidation of co. Co. becomes eligible for CIRP
failure
Moratorium period Full moratorium after Generally, no as basic
commencement of activities still ongoing after
proceedings commencement of
moratorium period
Burden on court Formal proceeding hence, Hybrid proceeding hence,

more burden on court are not overburdened
court
Management In the hands of IP In hands of CD
TABLE 4: COMPARISON BETWEEN CIRP V. PPIRP
ON BASIS OF BENEFITS AND CONCERNS225
Referring table no.6 and inquire about made in dissertation, it is significant to point out
that PPIRP may be basic effort towards diminishment of sufferings and torments
gone up against by stakeholders be it leasers, indebted individuals while going through
broad method of CIRP. PPIRP is compelling in filling gaps present in CIRP in terms
of adaptability, cost reduction, time utilization, continuation of business exercises,
settling group insolvencies, sure shot outcome, incorporation of both pre & post
default stress and decreasing burden of courts due to its hybrid nature. Consequently,
hypothesis is proved that pre-packaged insolvency resolution process under
IBC(Amendment)
225
Author made this table as a result of research made in the previous chapters of the dissertation to
find out benefits of PPIRP over CIRP.
Bill,2021 is effective in essence of speed, time, cost effectiveness and lessening burden
on courts.
According to “Chairman of the Insolvency and Bankruptcy Board of India MS Sahoo”-
“The pre-pack scheme would be available pre- and post-default.

Further, to avert unwanted delay, the government may even
consider setting up specific benches to reduce the load of cases of the
National Company Law Tribunal. Under the present regime of the
IBC, insolvency professionals are still evolving the necessary
expertise required over time”.226
However, to fill in holes in pre-packaged insolvency resolution process following

suggestions are suggested by author –
 Intervention power must be given to adjudicating authority to increase

transparency in PPIRP procedure
 When management is at fault and sole reason for co. distress then whole
management should be revamped
 Remove ambiguity arose in pre-pack procedure due to unrealistic time period
by mentioning time period required for resolution under base resolution plan
 Improve quality of marketing to help creditors in getting better financial returns.
 Legislature should make strict guidelines to abide by while resolving stress
through pre-pack mode of insolvency resolution
Until these gaps are not filled the pre-pack regime will be like toothless tiger
which is present there but not effective per se if no proper implementation is
there.
It can be concluded that pre-packaged insolvency resolution process is effective

enough to become a great alternative next to standard corporate insolvency
resolution process and is excellent interchangeable dispute component. It is one of
the amicable methods of alternate dispute resolution. The governing body just need
to keep up a satisfactory balance between executing the scheme as soon as possible
and actualizing it successfully. Today when out of the court settlements are so
prominent, PPIRP could be very excellent successor of CIRP. All we need is to
execute it perfectly but the legislature also needs to take precautions to avoid chaos
and to sort out its drawbacks like issues while valuation, translucency etc which may
become reason to abuse this resolution process. A need of procedural safeguards
will lead to more chaos than
226
Hitesh Mankar, understanding proposed pre-packaged insolvency resolution process and its
implications, Bar and Bench column, 11 March 2021
90
progress. Pre-packaging acts as a casual road under the ambit of IBC and looks for to
speedily resolve liquidation forms. The present regime of IBC has laid down
impeccable results counting effective determination plans and restoration of businesses,
and the law is advancing to superior oblige all stakeholders. The PIRP alternative is an
exertion to progress the viability of IBC by lessening the burden on different substances
included within the resolution process.
BIBLIOGRAPHY
PRIMARY SOURCES
 ACTS
1) Companies Act, 1956 (Act No. 1 of 1956)
2) Companies Act, 2013(ACT NO. 18 OF 2013)
3) Constitution of India, 1950
4) Corporate Insolvency and Governance Act ,2020(2020 CHAPTER 12)
5) Debtor Rehabilitation and Bankruptcy Act, 2016 (Act No. 14177 of 2016)
6) Indian Companies Act, 1882(Act No. 6 of 1882)
7) Indian Companies Act, 1913 (Act No. 7 of 1913)
8) Insolvency Act, 1986 (1986 Chapter 45)
9) Insolvency and Bankruptcy Board of India (Liquidation Process) Regulations, 2016,
Regulation 32
10) Insolvency and Bankruptcy Board of India (Pre-Packaged Insolvency Resolution
Process) Regulations, 2021
11) Insolvency and Bankruptcy Code (Act No. 31 OF 2016)
12) Insolvency and Bankruptcy Code (Amendment) Ordinance, 2020
13) Insolvency and Bankruptcy Code (Amendment) Ordinance, 2021 (No. 3 of 2021)
14) Insolvency and Bankruptcy Code (Second Amendment) Act (Act No. 17 of 2020)
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of 1993)
17) Securitisation and Reconstruction of Financial Assets and Enforcement of Security
Interest Act, 2002 (Act No. 54 of 2002)
18) Sick Industrial Companies (Special Provisions) Act, 1985 (Act No. 1 of 1986)
19) Statement of Insolvency Practice 16 (2009)
20) US Bankruptcy Code,2011
 REPORTS
1) Asian Development Bank (2020), Asian Development Outlook (ADO) 2020
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2) BLRC, The Report of the Bankruptcy Law Reforms Committee, February 2015
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2015
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Committee, February
5) IBBI (2019), Report of the Working Group on Group Insolvency, September
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Procedures
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data and analysis, March to October 2020
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(New York (Online) 4-7 May 2021) pg. 30-37
21) World Bank Group – Ease of Doing Business Report 2017 Related to Resolving
Insolvency
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Insolvency
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2020
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Related to Ease of Resolving Insolvency
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 BOOKS
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(Cambridge University Press, 2009)
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Perspective”, (Edward Elgar Publishing House, 2008)
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restructurings: An empirical study of private reorganization of firms in
default, (Journal of Financial Economics, Vol. 27 Issue 2, October 1990)
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Rescue” (Edward Elgar Publishing House, 2016)
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(World Bank Studies), (World bank publications ,12 January 2012)
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(United Nations Publication Sales No. E.05.V.10, New York, 2005)
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Implications on Corporate and Individual Insolvency”, Equitable Growth,
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A

Subject Code -GEN 110

Dr. Neelam Chawla

VIVEKANANDA INSTITUTE OF PROFESSIONAL STUDIES

Place- New Delhi

Name of the student – Nitika Upadhyaya

Enrollment No.- 03017707030

This is to certify that the dissertation entitled “Critical Analysis of

Place – New Delhi

It is my extreme pleasure to express my deep sense of thank and

It is my privilege to thank my parents and brother for their much-needed

AIR 2019 SC 9405….............................................................................14,15

2. Binani Industries Ltd. v. Bank of Baroda (2018) NCLAT 521…............14

3. Committee of Creditors of Essar Steel India Limited (through

Auth.signatory) v. Satish Kumar Gupta, (2020) 8 SCC 531….................14

4. Encote Energy (India) Pvt. Ltd. v. V. Venkatachalam, (2019)

Company Appeal (AT) 1226…....................................................................33

5. Gujarat Urja Vikas Nigam Restricted v. Amit Gupta

AIR 2021 SC 0157…..............................................................................33

6. In re Ditech Holding Corp., 2019 WL 4073378

(Bankr. S.D.N.Y. Aug 28,2019)..............................................................69

7. In Re SunGard Availability Services Capital Inc. No. 19-22915 (ROD)

8. In Re True Temper Sports Inc. No. 09 -13446 (PJW) (2009)...................71

9. In Re Vegas Investors LLC & others v. Henry Shinners,Finbarr O'Connell

10. Kridhan Infrastructure Pvt. Ltd. v. Venkatesan Sankaranarayan,

AIR 2020 SC 3299…...............................................................................14,41

Investment Managers LLP AIR 2017 SC 9279…......................................16

16. Roma Enterprises v. Mr. Martin S.K. Golla, Resolution Professional

(2018) Company Appeal (AT) 232….................................................................33

17. Sri Krishna Constructions v. Vasudevan, R.P. of Tiffins Barytes

Asbestos & Paints Ltd (2019) Company Appeal (AT) 619…............................33

AIR 2017 SC 8400…......................................................................................14

1.1 STATEMENT OF PROBLEM

1.2. RESEARCH METHODOLOGY

Pre-packaged insolvency resolution process in India is speedy and cost effective.

4. To identify whether Pre-packaged insolvency package resolution process is efficient

CHAPTER 1 - INTRODUCTION AND RESEARCH METHODOLOGY

CHAPTER 2 – PROVISIONS OF CORPORATE INSOLVENCY RESOLUTION

CHAPTER 3 – PROVISIONS OF PRE-PACKAGED INSOLVENCY

CHAPTER 5 – CONCLUSION AND SUGGESTIONS

Before discussing the provisions of pre-pack resolution process, it is necessary to

2.2.1. INSOLVENCY REGIME

Resolving Insolvency (Rank 111)

2.1.2. RELATIONSHIP AMONG MAIN STAKE HOLDERS OF THE

2.1.3. INSOLVENCY RESOLUTION AND COVID PANDEMIC SITUATION

2.1.4. RESOLUTION PROCESS

2.1.4.2. RBI PRUDENTIAL

2.1.4.3. INFORMAL OPTIONS

2.1.4.4. CORPORATE INSOLVENCY RESOLUTION PROCESS

2.2. REGULATION OF CORPORATE INSOLVENCY RESOLUTION

2.2.1.1. APPLICATION INITIATED BY FINANCIAL CREDITOR

Figure 1: INITIATION OF CIRP92

2.2.5. RESOLUTION PLAN AND ITS APPROVAL

2.2.6. DECISION (APPROVAL OR DISAPPROVAL OF RESOLUTION PLAN)

2.3. EFFECTIVITY OF CIRP

3.1. REGULATION OF PRE-PACKAGED INSOLVENCY PROCESS IN INDIA

S.No. FEATURES DETAILS

TABLE 1: BASIC FEATURES: PRE-PACK FOR MSME128

However, through notification130 passed on 9 April 2021, central government specifies

3.3. PRE- CONDITIONS TO INITIATE OF PPIRP

FIGURE 3: CONDITIONS FOR INITIATING PPIRP133

3.4 PERSON ELIGIBLE TO FILE THE APPLICATION

3.4.2. PERSON WHO IS NOT ENTITLED TO FILE APPLICATION