Page 45 - Banking Finance October 2022

ARTICLE

the base Resolution Plan does not provide for the full
payment of the confirmed claims, the Resolution Professional
shall invite prospective Resolution Applicant to submit a
Resolution Plan or compete with base Resolution Plan.
Appeal against the order approving the Pre-Pack Resolution
Process lies under Section 61(3) of the IBC.

That the Committee of Creditors by a vote of 66% may
resolve to initiate a Corporate Insolvency Resolution Process
in respect of Corporate Debtor at any time after the pre-
pack commencement date but before the resolution plan
approval under Section 54K of the IBC. The Adjudicating
Authority in case of any fraudulent conduct of the Company
and/or gross mismanagement and where there is
termination of pre-pack insolvency process pass an order of
Provides enabling clause:
liquidation.
for declaration of Liquidation in certain
circumstances
Salient features of PPIRP are:
for vesting of Management with RP in certain
Alternate Insolvency Resolution Process
circumstances
Retention of IBC 2016 basic structure.
for initiating avoidance of transactions
It covers only Corporate and LLP MSMEs.
to initiate for fraudulent or wrongful trading or
It does not include partnership firms and individuals. fraudulent management
Minimum Amount Due Rs. 10,00,000/-.
However, exemptions are provided to
Debtor in possession and creditor in control model.
Least disruptive to the continuity of businesses. MSMEs under section 29A, following
Binding effect and structure of formal Insolvency restrictions shall apply to PPIRP:
process. A person shall not be eligible to submit a resolution plan, if

Fast, efficient resolution process, maximization of value such person, or any other person acting jointly or in concert
and Cost effective. with such person:
is an undischarged insolvent;
Formal and informal approach model.
is a wilful defaulter in accordance with the guidelines
Provides alternate option to convert CIRP.
of the Reserve Bank of India
Provides power to CoC of vesting of Management
has been convicted for any offence punishable with
control with RP.
imprisonment for two years or more under any Act
Approval required by not less than 66 percent of the
specified under the Twelfth Schedule of IBC 2016; or for
financial creditors. seven years or more under any law for the time being
Pre-packaged insolvency resolution process to be in force. The said provision shall not apply to a person
completed within 120 days. The borrower gets the after the expiry of a period of two years from the date
benefits of a traditional restructuring under pre-pack of his release from imprisonment:
deals. is disqualified to act as a director under the Companies
Provides penal provision for any violation by Directors Act, 2013;
or partners of the CD.
is prohibited by the Securities and Exchange Board of

BANKING FINANCE | OCTOBER | 2022 | 45