Pre-Packaged Insolvency Resolution Process (PPIRP): Efficacy And Challenges For MSMEs
- YourLawArticle
- 2 days ago
- 2 min read
Written by: Roopampreet Kaur,4th year B.A.LL.B (Hons.), School of Law, Lovely Professional University
Abstract
Presented in India through the Insolvency and Bankruptcy Code (Amendment) Ordinance, 2021, the Pre-Packaged Insolvency Resolution Process (PPIRP) is an important change in the bankruptcy climate in the country that is specifically aimed at Micro, Small, and Medium-Sized Enterprises (MSMEs). The PPIRP is an integrative procedure and seeks to encourage fast, cost-effective and least disturbing debt settlement through informal conversations between debtors and creditors as well as formal judicial supervision. This study explores the efficiency of the PPIRP to achieve its declared objectives, quick resolution, and the sustainability of enterprise values and business continuity, as a continuing procedural and structural problem is examined limiting its wide application.
The 120-day schedule, debtor-in-possession model and limited range of litigation of the PPIRP make it quite clear why the model is superior to the traditional Corporate Insolvency Resolution Process (CIRP), as the study presents. Nevertheless, its practical application is stifled by a lack of awareness among stakeholders, unequal application of the tribunal and the probability of promoter abuse. Additionally, the inefficiency of the framework has been affected by issues of pre-negotiation openness, creditor engagement and the non-MSME business exclusion. To maximally fulfil the potential of the PPIRP as a viable insolvency tool of the MSME sector of the Indian economy, this paper will argue, based on empirical examination, policy-making documents, as well as comparative experience with international pre-pack models, that, although it has a bright prospect, it requires regulatory enhancement, capacity-building efforts, and an expansion of its scope.
Keywords: Pre-Packaged Insolvency, Insolvency and Bankruptcy Code, MSMEs, Corporate Insolvency, Debt Resolution, IBC 2016, PPIRP, Insolvency Framework, Financial Distress,
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