Insolvency and Bankruptcy Code Amendment Ordinance of 2021
President Ram Nath Kovind publicized the Insolvency and Bankruptcy Code (Amendment) Ordinance of 2021. This ordinance can permit a pre-packaged insolvency resolution method for MSMEs. PIRP is a Pre-packaged Insolvency Resolution method.

Ordinance
The ordinance introduces a PIRP for corporate persons classified as MSMEs below the MSME Development Act of 2006. Chapter III-A has been introduced to the Insolvency and Bankruptcy Code of 2016 below the amendment. It explains the initiation of the resolution, duties of resolution skilled, and eligibilities to require the advantages of pre-packaged insolvency resolution processes, etc.

Objectives of the Ordinance
The ordinance aims to supply an efficient different insolvency resolution method for the corporate persons classified as micro, small and medium enterprises.

How can the ordinance profit the corporates?
The Insolvency and Bankruptcy Code Amendment Ordinance permits the corporate debtor to submit a “base resolution plan” to the resolution skilled. However, the debtor ought to have the setup prepared before approaching the creditors to initiate PIRP. If the committee of creditors failed to approve the setup, then the resolution skilled shall invite candidates to submit different plans.

Applicability
The new pre-pack framework is applicable to MSMEs with the most default worth of Rupees 1 crore.
A Pre-packaged insolvency Resolution method cannot run in parallel to a CIRP (Corporate Insolvency Resolution Process).
The PIRP ought to have a three-year cooling-off amount from the closure of the opposite PIRP or CIRP.

Control of Company throughout PIRP
During the Pre-packaged insolvency Resolution process framework, the management of affairs of the corporate someone can still vest with the Board of directors.

Difference between PIRP and normal IBC method:
1. The pre-packaged insolvency Resolution method is applicable solely to MSMEs. On the other hand, IBC is applicable to all or any corporate debtors.
2. PIRP contains a default threshold of Rupees 1 crore. IBC deals with a threshold larger than Rupees 1 crore.
3. The pre-packaged insolvency Resolution process provides 90 days of the timeline to submit a resolution set up. On the other hand, the IBC provides 180 days.
4. The management control lies with the corporate debtor in possession of the creditor in control. On the other facet, the management control in IBC lies with the creditor in control.

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