- Mint
Scheme to resolve MSME bankruptcies finds few takers
NEW DELHI: The scheme for bankruptcy resolution of small businesses launched with effect last April has received a lukewarm response so far, suggesting the need for further tweaks. Data from bankruptcy rule-maker, the Insolvency and Bankruptcy Board of India (IBBI), showed that only two firms were admitted in FY22 under the scheme called ‘pre-pack. Pre-pack offers small businesses the flexibility to do a large part of the bankruptcy resolution-related work out of court. Shareholders and creditors could agree on a restructuring plan and approach the National Company Law Tribunal for its approval. The biggest advantage of the scheme is that admission of the case does not suspend existing management, unlike in general bankruptcy proceedings.’