The government on Sunday amended the Insolvency and Bankruptcy Code, 2016 by promulgating an Ordinance to provide pre-packaged resolution for micro, small and medium enterprises (MSMEs).
The amendment allows the Centre to notify the minimum amount of default value, not more than Rs 1 crore, for pre-packaged insolvency resolution process.
The government had last year suspended fresh insolvency proceedings for six months from March 25, when a nationwide lockdown was imposed to curb the spread of coronavirus infections. The suspension was extended twice by three months till December 24, 2020 and then March 24, 2021.
The Ordinance said MSMEs are critical for India’s economy as they contribute significantly to its gross domestic product and provide employment to a sizeable population, and it is considered necessary to urgently address the specific requirements of MSMEs relating to the resolution of their insolvency due to the unique nature of their businesses and simpler corporate structures.
News Source: businesstoday