IBC Tweak To Resolve MSME Bad Loans Is A Necessary Evil, But Caveats Are In OrderÂ
by R Jagannathan - Apr 6, 2021 05:35 AM
Nirmala Sitharaman and Narendra Modi
Snapshot
The IBC tweak can be defended on grounds of practicality, but there is a caveat: we should not allow the core principle to be hijacked entirely by slowly extending the process to all kinds of companies, big or small.
If at all further evidence is needed, the amendment to the Insolvency and Bankruptcy Code announced yesterday (5 April) through an ordinance shows how core principles always fray at the edges when they crash against the hard rocks of Indian reality.
IBC
Government of India, GoI has promulgated via the President, an ordinance further to amend the Insolvency and Bankruptcy Code, IBC 2016.
The ordinance was published in the Gazette of India Sunday (4 April).
The ordinance will make insolvency resolution easier and faster for Micro, small and medium, MSME using a pre-packaged process. MSME enterprises are critical for India s economy as they contribute significantly to its gross domestic product and provide employment to a sizeable population. It is considered necessary to urgently address the specific requirements of micro, small and medium enterprises relating to the resolution of their insolvency, due to the unique nature of their businesses and simpler corporate structures, the government ordinance said as reported by
Representational image.
An ordinance was promulgated to amend the Insolvency and Bankruptcy Code (IBC) on April 4, according to a notification The government has amended the insolvency law to provide for a pre-packaged resolution process for micro, small and medium enterprises.
An ordinance was promulgated to amend the Insolvency and Bankruptcy Code (IBC) on April 4, according to a notification.
The latest move comes less than two weeks after the suspension of certain IBC provisions ended. The suspension wherein fresh insolvency proceedings were not allowed for a year starting from March 25, 2020 was implemented amid the coronavirus pandemic disrupting economic activities.
As per the ordinance, it is considered necessary to urgently address the specific requirements of Micro, Small and Medium Enterprises (MSMEs) relating to the resolution of their insolvency, due to the unique nature of their businesses and simpler corporate structures.
Govt amends IBC, introduces pre-packaged resolution process for MSMEs
The amendment allows the Centre to notify the minimum amount of default value, not more than Rs 1 crore, for pre-packaged insolvency resolution process.
BusinessToday.In | April 5, 2021 | Updated 14:59 IST
The government had last year suspended fresh insolvency proceedings for six months from March 25. The suspension was extended twice by three months.
The government on Sunday amended the Insolvency and Bankruptcy Code, 2016 by promulgating an Ordinance to provide pre-packaged resolution for micro, small and medium enterprises (MSMEs).
The amendment allows the Centre to notify the minimum amount of default value, not more than Rs 1 crore, for pre-packaged insolvency resolution process.
The benchmark indices pared losses in afternoon trade as buying emerged at lower levels. At 13:20 IST, the barometer index, the S&P BSE Sensex, dropped 956.03 points or 1.91% at 49,073.80. The Nifty 50 index skid 264.05 points or 1.78% at 14,603.30. A spike in domestic coronavirus cases and fresh curbs imposed by the state government dented investors sentiment.
ICICI Bank (down 3.70%), HDFC (down 3.15%) and HDFC Bank (down 2.37%) were major drags.
Selling was broad based. The S&P BSE Mid-Cap index fell 1.40%. The S&P BSE Small-Cap index slipped 1.26%.
Sellers outnumbered buyers. On the BSE, 834 shares rose and 1,988 shares fell. A total of 186 shares were unchanged.
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