{"id":23079,"date":"2022-08-21T12:57:10","date_gmt":"2022-08-21T07:27:10","guid":{"rendered":"https:\/\/carajput.com\/blog\/?p=23079"},"modified":"2023-05-23T18:52:46","modified_gmt":"2023-05-23T13:22:46","slug":"new-insolvency-resolution-framework-msme","status":"publish","type":"post","link":"https:\/\/carajput.com\/blog\/new-insolvency-resolution-framework-msme\/","title":{"rendered":"New Insolvency Resolution Framework MSME"},"content":{"rendered":"<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_58 counter-hierarchy ez-toc-counter ez-toc-light-blue ez-toc-container-direction\">\n<p class=\"ez-toc-title\">Page Contents<\/p>\n<label for=\"ez-toc-cssicon-toggle-item-6a0bf5e169c50\" class=\"ez-toc-cssicon-toggle-label\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #000000;color:#000000\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #000000;color:#000000\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/label><input type=\"checkbox\"  id=\"ez-toc-cssicon-toggle-item-6a0bf5e169c50\"  aria-label=\"Toggle\" \/><nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/carajput.com\/blog\/new-insolvency-resolution-framework-msme\/#Insolvency_Resolution_Framework_MSME_Under_the_IBC\" title=\"Insolvency Resolution Framework MSME Under the IBC\u00a0\">Insolvency Resolution Framework MSME Under the IBC\u00a0<\/a><ul class='ez-toc-list-level-3'><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/carajput.com\/blog\/new-insolvency-resolution-framework-msme\/#What_are_the_default_Amounts_under_the_IBC\" title=\"What are the default Amounts under the IBC ?\">What are the default Amounts under the IBC ?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/carajput.com\/blog\/new-insolvency-resolution-framework-msme\/#What_are_the_COVID_related_amendments_under_the_IBC\" title=\"What are the COVID related amendments under the IBC?\u00a0\">What are the COVID related amendments under the IBC?\u00a0<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/carajput.com\/blog\/new-insolvency-resolution-framework-msme\/#What_are_the_pre_package_insolvency_under_the_IBC\" title=\"What are the pre package insolvency under the IBC?\u00a0\">What are the pre package insolvency under the IBC?\u00a0<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/carajput.com\/blog\/new-insolvency-resolution-framework-msme\/#New_Professional_%E2%80%93_Insolvency_Professional\" title=\"New Professional \u2013 Insolvency Professional\">New Professional \u2013 Insolvency Professional<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-6\" href=\"https:\/\/carajput.com\/blog\/new-insolvency-resolution-framework-msme\/#What_are_the_Opportunities_in_the_Insolvency_Professional\" title=\"What are the Opportunities in the Insolvency Professional?\">What are the Opportunities in the Insolvency Professional?<\/a><\/li><\/ul><\/li><\/ul><\/nav><\/div>\n<h2><img loading=\"lazy\" decoding=\"async\" class=\"alignnone wp-image-23081\" src=\"https:\/\/carajput.com\/blog\/wp-content\/uploads\/2022\/08\/RP.jpg\" alt=\"RP\" width=\"977\" height=\"542\" \/><\/h2>\n<h2><span class=\"ez-toc-section\" id=\"Insolvency_Resolution_Framework_MSME_Under_the_IBC\"><\/span><span style=\"color: #ff0000;\"><strong><u>Insolvency Resolution Framework MSME U<\/u><\/strong><strong><u>nder the IBC\u00a0<\/u><\/strong><\/span><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<ul>\n<li><span style=\"color: #000080;\"><strong><u>Meaning<\/u><\/strong><\/span>\n<ul>\n<li>Under this framework, MSMEs themselves will be able to apply to initiate bankruptcy proceedings through this mechanism.<\/li>\n<\/ul>\n<\/li>\n<li><span style=\"color: #000080;\"><strong><u>Existing Provisions\/<\/u><\/strong> <strong><u>Development<\/u><\/strong><\/span>\n<ul>\n<li>Currently, Section 240A of the Code deals with MSME where exception is granted form section 29A (barring promoters to bid for company). Separate Framework dealing with resolution of MSME is expected to come soon.<\/li>\n<\/ul>\n<\/li>\n<li><span style=\"color: #000080;\"><strong><u>Impact<\/u><\/strong><\/span>\n<ul>\n<li>Follow \u201cdebtor in control\u201d model while ordinarily the corporate insolvency resolution process follows a \u201ccreditor in control\u201d system.<\/li>\n<li>No change in control<\/li>\n<li>Self restructuring plan<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<p><img loading=\"lazy\" decoding=\"async\" class=\"alignnone wp-image-23082\" src=\"https:\/\/carajput.com\/blog\/wp-content\/uploads\/2022\/08\/CIRP-Flow-Chart-RP.jpg\" alt=\"CIRP-Flow-Chart RP\" width=\"982\" height=\"491\" srcset=\"https:\/\/carajput.com\/blog\/wp-content\/uploads\/2022\/08\/CIRP-Flow-Chart-RP.jpg 600w, https:\/\/carajput.com\/blog\/wp-content\/uploads\/2022\/08\/CIRP-Flow-Chart-RP-300x150.jpg 300w\" sizes=\"(max-width: 982px) 100vw, 982px\" \/><\/p>\n<p><span style=\"color: #000080;\"><strong><u>Individual Resolution and Bankruptcy for Individ<\/u><\/strong><strong><u>ual <\/u><\/strong><\/span><span style=\"color: #000080;\"><strong><u>under the IBC\u00a0<\/u><\/strong><\/span><\/p>\n<ul>\n<li><span style=\"color: #000080;\"><strong><u>Meaning<\/u><\/strong><\/span>\n<ul>\n<li>A debtor or creditor can file for Insolvency Resolution and upon failure on resolution, Bankruptcy proceedings can be initiated.<\/li>\n<\/ul>\n<\/li>\n<li><span style=\"color: #000080;\"><strong><u>Existing Provisions\/<\/u><\/strong> <strong><u>Development<\/u><\/strong><\/span>\n<ul>\n<li>Currently, Section 94- 148 of the Code deals deal with the Individual Resolution and Bankruptcy. Provisions in respect of personal guarantors are enforce however with respect to Individual and partnership are not yet enforced.<\/li>\n<\/ul>\n<\/li>\n<li><span style=\"color: #000080;\"><strong><u>Impact<\/u><\/strong><\/span>\n<ul>\n<li>Poor frameworks for recovery have had an adverse impact on the credit market, notifying individual insolvency provisions will bring financial discipline in the people as well.<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<h3><span class=\"ez-toc-section\" id=\"What_are_the_default_Amounts_under_the_IBC\"><\/span><span style=\"color: #000080;\"><strong><u>What are the default Amounts <\/u><\/strong><\/span><span style=\"color: #000080;\"><strong><u>under the IBC ?<\/u><\/strong><\/span><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p style=\"padding-left: 40px;\"><span style=\"color: #000080;\"><strong>Company or an LLP.<\/strong><\/span><\/p>\n<ul>\n<li style=\"list-style-type: none;\">\n<ul>\n<li>Minimum amount of Rs. 1 Lakh<\/li>\n<li>The Central Government may specify higher amount which shall not be more than Rs. 1 crore.<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<p style=\"padding-left: 40px;\"><span style=\"color: #000080;\"><strong>Partnership Firm or an Individual<\/strong><\/span><\/p>\n<ul>\n<li style=\"list-style-type: none;\">\n<ul>\n<li>Minimum amount of Rs. 1 thousand<\/li>\n<li>The Central Government may specify higher amount which shall not be more than Rs. 1 lakh.<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<h3><span class=\"ez-toc-section\" id=\"What_are_the_COVID_related_amendments_under_the_IBC\"><\/span><span style=\"color: #000080;\"><strong><u>What are the COVID related amendments <\/u><\/strong><\/span><span style=\"color: #000080;\"><strong><u>under the IBC?\u00a0<\/u><\/strong><\/span><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<ol>\n<li>Enhancement of minimum default\u00a0 limit from Rs. 1 lakh\u00a0 to Rs. 1cr<\/li>\n<li>Suspension of Fresh Insolvency\u00a0 Proceedings for Six\u00a0 months (from\u00a0 03.2020) which\u00a0 may be extended to\u00a0 1 year<\/li>\n<li>No application shall ever be filed for the\u00a0 defaults occurred i.e. on or after 25.03.2020 <em>(for Six months which may be extended to 1 yr).<\/em><\/li>\n<\/ol>\n<h3><span class=\"ez-toc-section\" id=\"What_are_the_pre_package_insolvency_under_the_IBC\"><\/span><span style=\"color: #000080;\"><strong><u>What are the pre package insolvency under the IBC?\u00a0<\/u><\/strong><\/span><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p><img loading=\"lazy\" decoding=\"async\" class=\"alignnone size-full wp-image-23080\" src=\"https:\/\/carajput.com\/blog\/wp-content\/uploads\/2022\/08\/Pre-Package-Insolvency-under-the-IBC-.png\" alt=\"Pre Package Insolvency under the IBC\u00a0\" width=\"1500\" height=\"1253\" srcset=\"https:\/\/carajput.com\/blog\/wp-content\/uploads\/2022\/08\/Pre-Package-Insolvency-under-the-IBC-.png 1500w, https:\/\/carajput.com\/blog\/wp-content\/uploads\/2022\/08\/Pre-Package-Insolvency-under-the-IBC--300x251.png 300w, https:\/\/carajput.com\/blog\/wp-content\/uploads\/2022\/08\/Pre-Package-Insolvency-under-the-IBC--1024x855.png 1024w, https:\/\/carajput.com\/blog\/wp-content\/uploads\/2022\/08\/Pre-Package-Insolvency-under-the-IBC--768x642.png 768w, https:\/\/carajput.com\/blog\/wp-content\/uploads\/2022\/08\/Pre-Package-Insolvency-under-the-IBC--800x668.png 800w\" sizes=\"(max-width: 1500px) 100vw, 1500px\" \/><\/p>\n<ul>\n<li><span style=\"color: #000080;\"><strong><u>Meaning<\/u><\/strong><\/span>\n<ul>\n<li>A pre package insolvency is a pre planned process in which financially distressed company and its creditors reach an\u00a0 agreement with a buyer for its sale prior to initiating CIRP.<\/li>\n<\/ul>\n<\/li>\n<li><span style=\"color: #000080;\"><strong><u>Existing Provisions\/<\/u><\/strong> <strong><u>Development<\/u><\/strong><\/span>\n<ul>\n<li>Currently, there is no provision under the Code dealing with pre package insolvency. Separate Framework dealing with pre package insolvency is yet to come.<\/li>\n<\/ul>\n<\/li>\n<li><span style=\"color: #000080;\"><strong><u>Impact<\/u><\/strong><\/span>\n<ul>\n<li>It will promote early debt restructuring in a manner that best achieves the Code&#8217;s objectives.<\/li>\n<li>Offer a chance to debtor company to revive the<\/li>\n<li>company while negotiating with creditors.<\/li>\n<li>Management to put genuine efforts for revival<\/li>\n<li>Continuity of business<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<h3><span class=\"ez-toc-section\" id=\"New_Professional_%E2%80%93_Insolvency_Professional\"><\/span><span style=\"color: #000080;\"><strong><u>New Professional \u2013 Insolvency Professional<\/u><\/strong><\/span><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<ul>\n<li>Insolvency Professional, who will conduct the insolvency resolution process, take over the management of a company, assist creditors in the collection of relevant information, and manage the liquidation process.<\/li>\n<li>Enrolled as a member of an insolvency professional agency and registered with the Insolvency and Bankruptcy Board of India.<\/li>\n<li>Every insolvency professional shall abide by the code of conduct.<\/li>\n<\/ul>\n<h3><span class=\"ez-toc-section\" id=\"What_are_the_Opportunities_in_the_Insolvency_Professional\"><\/span><span style=\"color: #000080;\"><strong><u>What are the Opportunities in the <\/u><\/strong><strong><u>Insolvency Professional?<\/u><\/strong><\/span><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<ol>\n<li>Interim Resolution Professional \u2013 IRP.<\/li>\n<li>Resolution Professional-RP.<\/li>\n<li>RP for Class of Creditors.<\/li>\n<li>Monitoring Member \u2013 RP.<\/li>\n<li>Stakeholders Steering Committee \u2013 Member.<\/li>\n<li>Transactional Auditor \/ <a href=\"https:\/\/carajput.com\/publications\/audit-vs-forensic-audit.pdf\">Forensic<\/a> Auditor \u2013 PUFE Transactions.<\/li>\n<li>Valuers \u2013 If MBA (Finance \/ Civil \/ Mechanical &#8211; Engineers) Holders.<\/li>\n<li>Bankruptcy Trustee.<\/li>\n<li>SEBI Administrators<\/li>\n<li>Preparation of Information Memorandum.<\/li>\n<li>Preparation of Resolution Plans.<\/li>\n<li>Information Utility \u2013 Uploading of Information.<\/li>\n<li>Presentation of Case in NCLT \/ NCLAT (for LLB Qualification \u2013 Added Advantage).<\/li>\n<li>Guidance to Corporate Debtor (i.e., Companies \/ SMEs).<\/li>\n<li>Representation from Bankers (To participate in CoC Meetings \u2013 Private Sector Banks).<\/li>\n<li>Assist to Operational Creditors (Those who supply Raw Material \/ Utility Services to CD).<\/li>\n<li>Provide Compliance \u2013 IBBI \/ Services etc. etc.<\/li>\n<\/ol>\n<p><span style=\"color: #000080;\"><strong>Popular\u00a0<\/strong><\/span><span style=\"color: #000080;\"><b>blog: &#8211;<\/b><\/span><\/p>\n<ul>\n<li><span style=\"color: #000080;\"><strong><a style=\"color: #000080;\" href=\"https:\/\/carajput.com\/blog\/sale-as-going-concern-under-liquidation\/\">Sale as Going concern under liquidation\u00a0<\/a><\/strong><\/span><\/li>\n<li><span style=\"color: #000080;\"><strong><a style=\"color: #000080;\" href=\"https:\/\/carajput.com\/blog\/liquidator-fees-to-be-paid-cirp-regulations\/\">Liquidator fees to be paid CIRP Regulations<\/a><\/strong><\/span><\/li>\n<li><a href=\"https:\/\/www.caindelhiindia.com\/blog\/initiation-of-liquidation-under-the-ibc\/\"><strong>Initiation of Liquidation under the IBC Code\u00a0<\/strong><\/a><\/li>\n<li><span style=\"color: #000080;\"><strong><a style=\"color: #000080;\" href=\"https:\/\/carajput.com\/blog\/liquidation-process-for-cd-under-ibc\/\">Liquidation Process for CD under IBC\u00a0<\/a><\/strong><\/span><\/li>\n<li><span style=\"color: #000080;\"><a style=\"color: #000080;\" href=\"https:\/\/carajput.com\/blog\/ibc-forms-insolvency-and-bankruptcy-code-2016-forms-demand-notices-returns\/\"><strong>IBC Forms Insolvency and Bankruptcy Code 2016 Forms Demand Notices Returns<\/strong><\/a><\/span><\/li>\n<\/ul>\n","protected":false},"excerpt":{"rendered":"<p>Insolvency Resolution Framework MSME Under the IBC\u00a0 Meaning Under this framework, MSMEs themselves will be able to apply to initiate bankruptcy proceedings through this mechanism. Existing Provisions\/ Development Currently, Section 240A of the Code deals with MSME where exception is granted form section 29A (barring promoters to bid for company). Separate Framework dealing with resolution &hellip;<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[8789],"tags":[976,3680],"aioseo_notices":[],"_links":{"self":[{"href":"https:\/\/carajput.com\/blog\/wp-json\/wp\/v2\/posts\/23079"}],"collection":[{"href":"https:\/\/carajput.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/carajput.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/carajput.com\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/carajput.com\/blog\/wp-json\/wp\/v2\/comments?post=23079"}],"version-history":[{"count":5,"href":"https:\/\/carajput.com\/blog\/wp-json\/wp\/v2\/posts\/23079\/revisions"}],"predecessor-version":[{"id":23309,"href":"https:\/\/carajput.com\/blog\/wp-json\/wp\/v2\/posts\/23079\/revisions\/23309"}],"wp:attachment":[{"href":"https:\/\/carajput.com\/blog\/wp-json\/wp\/v2\/media?parent=23079"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/carajput.com\/blog\/wp-json\/wp\/v2\/categories?post=23079"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/carajput.com\/blog\/wp-json\/wp\/v2\/tags?post=23079"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}