Prepackaged Insolvency Resolution Process

A family-run auto-parts company in Taloja owes its bank and two lenders a few crores. The promoters and lenders agree privately that the loans should be restructured, and a buyer is ready. If they go through the ordinary CIRP, the company will be frozen in public, suppliers will panic and months will pass. Could the deal be agreed first and only then blessed by the tribunal? That is the idea behind the pre-packaged insolvency resolution process, added to the Code in 2021 as Chapter III-A. This topic explains who can use it, how it runs and how it differs from ordinary CIRP.

In two minutes

The pre-packaged insolvency resolution process (ss.54A to 54P) lets an eligible corporate debtor, chiefly a micro, small or medium enterprise, reach an agreed resolution plan with its unrelated financial creditors before filing, then have the NCLT admit the case and approve the plan within 120 days, while the existing management stays in control unless the NCLT orders otherwise.

The rest of this chapter

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