Pre-Packaged Insolvency Resolution Process (PPIRP)

Insolvency and Bankruptcy Code (Amendment) Ordinance, 2021 issued on 4-4-2021, provides an efficient alternative insolvency resolution process for corporate persons classified as micro, small and medium enterprises under the Insolvency and Bankruptcy Code, 2016, ensuring quicker, cost-effective and value maximising outcomes for all the stakeholders, in a manner which is least disruptive to the continuity of their businesses and which preserves jobs.

Advantages Of PPIRP Over CIRP

PPIRP has following inherent advantages over CIRP:

Preliminary work already done before filing application to Adjudicating Authority – CIRP does not involve any preliminary steps before filing application to Adjudicating Authority (AA).

PPIRP process commences only after;

(a) at least 66% of financial creditors approval proposal for PPIRP and approve name of Resolution Professional

(b) Corporate debtor passes special resolution on 75% of members approve

(c) Corporate Debtor prepares a Base Resolution Plan

(d) Name of Resolution Professional has been approved by Financial Creditors and Corporate Debtors.

Informal understanding with creditors before making formal application to AA for approval – Pre-Pack Insolvency resolution plan allows creditors and debtors to work on an informal plan and then submit to Adjudicating Authority (AA) for approval. Thus, flexibility is available in initial stages.

Fast approval and reduction of burden on NCLT – Since informal understanding has already been reached between financial creditors and corporate debtor, approval will be fast as practically there may not be opposition to resolution plan. At stage of admission, detailed examination of issues will not be required.

Management continues with corporate debtor and hence no disturbance in running of enterprise – In PPIRP, the management continues with corporate debtor himself, except in case of fraud. Thus, disturbance in routine management of enterprise is negligible.

Base Resolution Plan is good starting point – The Base Resolution Plan prepared by corporate debtor having inside knowledge of business is a good starting point. In fact, if there is no impairment of operational creditors, Committee of Creditors can accept the Base Resolution Plan itself, with some improvements.

Corporate debtor is allowed to be partner with other person – It is specifically clarified that the corporate debtor may submit the base resolution plan either individually or jointly with any other person. He can rope in financial or technical or marketing partner (as per requirement) and submit best possible resolution plan.

Swiss challenge method to get best possible resolution plan – A ‘Swiss challenge’ is a method where a bid is published and third parties are invited to match or better it. This system has been specifically provided in PPIRP regulations.

A Swiss challenge is a method of bidding, in which an interested party initiates a proposal for a contract or the bid for a project. The details of the project are out in the public and invites proposals from others interested in executing it. The ‘Swiss Challenge’ allows a seller to mix-and-match the features of both an open auction and a closed tender to discover the best price for an asset.

“My Rupee Mantra” experts provide the consultancy to all the stake holders in initiation of Individual Insolvency Process which include:

• Drafting and issue of Notices
• Preparation of Base Resolution Plan
• Drafting of application to be filed before Adjudicating Authority.
• Follow up and pleading of application filed with NCLT on behalf of the concerned applicant.
• Guide the Corporate Debtor in getting investors to revive the business.
• Follow up at various levels.