In a major development, the Government of Modi said the latest amendment to the bankruptcy law by ordinance aims to provide small and medium-sized enterprises (MSMEs) with an efficient alternative resolution framework. A pre-packaged bankruptcy resolution process has been introduced for stressed MSMEs.
Honor the honest MSME owner
The initiative is based on a trust model, and the proposed amendments honor honest MSME owners by attempting to ensure that resolutions are made and the company is with them, the Ministry of Internal Affairs and Communications said. Said in the release.
“This amendment is as an MSME under the Code to ensure faster, more cost-effective and value-maximizing results for all stakeholders in a way that minimizes the continuity of the MSME. It aims to provide an efficient alternative bankruptcy resolution framework for classified business people. It is a company and maintains employment. “
Bankruptcy and Bankruptcy Law (IBC)
The Bankruptcy and Bankruptcy Act (IBC) amendment ordinance was promulgated on April 4. The Federal Cabinet approved a proposal to amend the IBC on March 31st.
United Budget for 2021-22
Presenting a federal budget for 2021-22, in February Finance Minister Nirmala Sitharaman strengthened the NCLT framework, implemented an electronic court system and debt to ensure faster resolution of the case. Alternative solutions and special frameworks introduce MSME. The Ministry of Internal Affairs and Communications, also led by Sisaraman, is implementing IBC.
Pre-packaged bankruptcy resolution
According to the ministry, incorporating a pre-packaged bankruptcy resolution process into MSME is expected to reduce the pain facing MSME due to the effects of a pandemic. “It provides business people classified as MSMEs with an efficient alternative bankruptcy resolution framework for timely, efficient and cost-effective distress resolution, thereby providing fixed income, job security and business. It ensures ease of use and a positive signal to the conservation of corporate capital. ” ..
Other expected benefits
Other expected benefits of the amendment include reducing the burden on arbitration bodies, guaranteeing the continuity of business operations of corporate debtors, reducing processing costs, and achieving maximum assets for financial creditors.
The Prepack Introductory Ordinance was promulgated on April 4, less than two weeks after the suspension of certain IBC provisions ended.
As the pandemic disrupted economic activity, a new bankruptcy proceeding was disallowed for a year starting March 25, 2020.
MSME warns!Bankruptcy Law Amendment-Efficient Alternative Resolution Framework
Source link MSME warns!Bankruptcy Law Amendment-Efficient Alternative Resolution Framework