WHAT IS PRE-PACK RESOLUTION?
- Pre-pack is a hybrid corporate rescue process
- It blends elements & virtues of both formal & informal insolvency proceedings.
- It allows a company to prepare a resolution plan with creditors before initiating insolvency proceedings
- Private discussions can take place between promoters & financial creditors
WHAT DOES THE CURRENT FRAMEWORK ENTAIL?
- Pre-packaged insolvency resolution process for MSMEs
- Govt can set a threshold for default exceeding Rs 1 cr for initiation
- Govt has prescribed the threshold of Rs 10 lakh for this purpose.
- Consent of 66% of unrelated financial creditors & special majority holders required
- Pre-packaged insolvency resolution process has to be completed in 120 days