Pre-pack problems

MSME Ordinance violates basic principle of IBC

The government has decided that a “pre-packaged” resolution process for micro, small, and medium enterprises (MSMEs) is needed to supplement the Insolvency and Bankruptcy Code (IBC) and has now introduced an Ordinance on that. It has been argued that the pandemic’s effect on MSMEs in particular makes such a hybrid pre-insolvency process necessary. The package will retain the emphasis on timelines that was part of the structure of the IBC, with the requirement that the process be completed within 120 days. It has a somewhat informal element, in that the resolution will be negotiated with a possible buyer of the