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Lok Sabha passes Insolvency and Bankruptcy Code (Amendment Bill), 2021

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The Insolvency and Bankruptcy Code (Amendment Bill), 2021 presented by Minister of State for Corporate Affairs, Rao Inderjit Singh was passed in the Parliament without any discussions. The bill proposes a pre-packaged insolvency resolution process for Corporate debtors under the MSME (Micro, Small and Medium Enterprises) Development Act, 2006.

  • It will replace the Insolvency Amendment Ordinance 2021 promulgated by the President Ram Nath Kovind on April 4, 2021.
  • The Ordinance amended the Insolvency and Bankruptcy Code, 2016.

Proposed Changes

i.The bill specifies a minimum threshold of not more than INR 1 crore for initiating the pre-packaged insolvency resolution process (Government has already prescribed the threshold of INR 10 Lakh for this purpose).

ii.Disposal of simultaneous applications for initiation of corporate insolvency resolution process/pre-packaged insolvency resolution process, pending against the same corporate debtor.

iii.The amendment inserts a new Chapter III-A containing sections 54A to 54P to facilitate pre-package insolvency resolution process for corporate persons that are MSMEs.

iv.It provides penalty for fraudulent or malicious initiation of pre-packaged insolvency resolution process or with intent to defraud persons.

  • It also has provisions for penalty on fraudulent management of corporate debtors during the pre-packaged insolvency resolution process.

v.The bill also provides punishment for offences related to pre-packaged insolvency resolution processes.

Recent Related News:

April 7, 2021, The government of India has promulgated an Ordinance titled ‘The Insolvency and Bankruptcy Code (Amendment) Ordinance, 2021’ to allow ‘pre-packaged insolvency resolution process (PIRP)’ to MSME.

About Ministry of Corporate Affairs

Union Minister –  Nirmala Sitharaman (Rajya Sabha – Karnataka)
Minister of State – Rao Inderjit Singh (Lok Sabha – Gurgaon, Haryana)