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The bill proposes a new chapter in the IB Code to facilitate the pre-packaged insolvency resolution process for MSMEs
New Delhi: The Lok Sabha on 28 July passed the IBC amendment bill without any debate or a discussion, as opposition members continued their protest over Pegasus snooping issue and three new farm laws.
The bill proposes a new chapter in the Insolvency and Bankruptcy Code to facilitate the pre-packaged insolvency resolution process for corporate persons that are Micro, Small and Medium Enterprises (MSMEs). The proposed amendments would allow the government to notify the threshold of a default not exceeding Rs 1 crore for initiation of the pre-packaged resolution process. The government has already prescribed the threshold of Rs 10 lakh for this purpose.
As per the Statement of Objects and Reasons of the bill, it seeks to specify a minimum threshold of not more than Rs 1 crore for initiating the pre-packaged insolvency resolution process as well as provisions for disposal of simultaneous applications for initiation of the insolvency resolution process and pre-packaged insolvency resolution process, pending against the same corporate debtor.
There would be a penalty for fraudulent or malicious initiation of the pre-packaged insolvency resolution process, or with intent to defraud persons, and for fraudulent management of the corporate debtor during the process. Punishment would be awarded for offences related to the pre-packaged insolvency resolution process.