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Areion Resolution & Turnaround Private Limited
(An Insolvency Professional Entity recognised by IBBI)
A/301,Kanakia Zillion, Junction of LBS Road and CST Road,
BKC Annexe, Kurla (West), Mumbai - 400 070
Website: www.areionart.com | Linkedin: https://rb.gy/wmqryl
PRE-PACK INSOLVENCY RESOLUTION PROCESS FOR
MICRO, SMALL AND MEDIUM ENTERPRISES
(MSMEs)
PRE-PACK INSOLVENCY RESOLUTION PROCESS FOR MSMEs
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PROMULGATION OF THE
INSOLVENCY AND BANKRUPTCY CODE (AMENDMENT) ORDINANCE, 2021
The President promulgated the Insolvency and Bankruptcy Code (Amendment)
Ordinance, 2021 on 4th April 2021. The Cabinet had approved on 31st March 2021
the proposal to make amendments in the Insolvency and Bankruptcy Code, 2016
(Code), through the Insolvency and Bankruptcy Code (Amendment) Ordinance,
2021. The amendments aims to provide an efficient alternative insolvency resolution
framework for corporate persons classified as micro, small and medium enterprises
(MSMEs) under the Code, for ensuring quicker, cost-effective and value
maximising outcomes for all the stakeholders, in a manner which is least disruptive
to the continuity of MSMEs businesses and which preserves jobs. The initiative is
based on a trust model and the amendments honour the honest MSME owners by
trying to ensure that the resolution happens and the company remains with them. It is expected that the incorporation of Pre-Packaged insolvency resolution process
for MSMEs in the Code will alleviate the distress faced by MSMEs due to the impact
of the pandemic & the unique nature of their business, duly recognizing their
importance in the economy. It provides an efficient alternative insolvency resolution framework for corporate
persons classified as MSMEs for timely, efficient & cost-effective resolution of
distress thereby ensuring positive signal to debt market, employment
preservation, ease of doing business and preservation of enterprise capital. Other
expected impact and benefits of the amendment in Code are lesser burden on
Adjudicating Authority, assured continuity of business operations for corporate
debtor (CD), less process costs & maximum assets realization for financial
creditors (FC) and assurance of continued business relation with CD and rights
protection for operational Creditors (OC). The Amendment Ordinance seeks to amend sections such as 4, 5, 11, 33, 34, 61,
65, 77, 208, 239, 240 & insert new sections such as 11A, 67A, 77A and a new
chapter as IIIA on Pre-Packaged insolvency resolution process for MSMEs in the
Code based on recommendations made by the Insolvency Law Committee (ILC).
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TABLE OF CONTENT
S. No. Particulars Page No.
Part I
1 Definition of MSMEs 3
2 Regulating Provisions for Pre-Packs under IBC,2016 3
3 New Definitions under the Code 4
4 Flowchart Explaining Pre Pack Insolvency Resolution
Process (“PPIRP”)
5
5 Difference between CIRP & PPIRP 6
Part II
6 Key Highlights of PRIRP 7-13
Part III
7 Introduction of additional new Provisions 14-15
Part IV
8 Amendments in the Existing Provisions 16-17
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PART I
DEFINITION OF MSMEs Micro, Small and Medium Enterprises Development Act, 2006 defines MSMEs as follows:
Type of Enterprise Investment in Plant and
Machinery or Equipment (Rs.)
Turnover (Rs.)
Micro not exceeding 1 Crore not exceeding 5 Crores
Small not exceeding 10 Crores not exceeding 50
Crores
Medium not exceeding 50 Crores not exceeding 250 Crores
(For a particular class of enterprise, the threshold for investment and turnover to be read
in conjunction.)
REGULATING PROVISIONS FOR PRE-PACKS UNDER IBC,2016
A new Chapter namely Chapter III A (Pre-Packaged Insolvency Resolution Process)
has been inserted in the Insolvency and Bankruptcy Code, 2016 (“Code”) providing for
following sections:
Section 54A Corporate debtors eligible for pre-packaged insolvency resolution process
Section 54B Duties of resolution professional before initiation of pre-packaged
insolvency resolution process.
Section 54C Application to initiate prepackaged insolvency resolution process.
Section 54D Time-limit for completion of pre-packaged insolvency resolution
process.
Section 54E Declaration of moratorium and public announcement during
prepackaged insolvency resolution process
Section 54F Duties and powers of resolution professional during prepackaged
insolvency resolution process.
Section 54G List of claims and preliminary information memorandum.
Section 54H Management of affairs of corporate debtor.
Section 54I Committee of creditors.
Section 54J Vesting management of corporate debtor with resolution professional.
Section 54K Consideration and approval of resolution plan.
Section 54L Approval of resolution plan.
Section 54M Appeal against order under section 54L.
Section 54N Termination of pre-packaged insolvency resolution process.
Section 54O Initiation of corporate insolvency resolution process
Section 54P Application of provisions of Chapters II, III, VI, and VII to this
Chapter.
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Apart from the above, following news sections are also being inserted in the Code:
Section 11A Disposal of applications u/s 54C/7/9/10.
Section 67A Fraudulent management of corporate debtor during prepackaged
insolvency resolution process.
Section 77A Punishment for offences related to pre-packaged insolvency resolution process.
NEW DEFINITIONS UNDER THE CODE
In Section 5 of the Code, following new definitions have been inserted:
(2A) Base Resolution Plan means a resolution plan provided by the corporate debtor under
clause (c) of sub-section (4) of Section 54A.
(23A) Preliminary Information Memorandum means a memorandum submitted by the
corporate debtor under clause (b) of sub-section (1) of Section 54G.
(23B) Pre-Packaged Insolvency Date means the date of admission of an application for
initiating the pre-packaged insolvency resolution process by the Adjudicating Authority under
clause (a) of sub-section (4) of Section 54C.
(23C) Pre-Packaged Insolvency Resolution Process Costs means:
the amount of any interim finance and the costs incurred in raising such finance;
the fees payable to any person acting as a resolution professional and any expenses
incurred by him for conducting the pre-packaged insolvency resolution process during
the prepackaged insolvency resolution process period, subject to sub-section (6) of
section 54F;
any costs incurred by the resolution professional in running the business of the
corporate debtor as a going concern pursuant to an order under sub-section (2) of
section 54J;
any costs incurred at the expense of the Government to facilitate the pre-packaged
insolvency resolution process; and
any other costs as may be specified;
(23D) Pre-Packaged Insolvency Resolution Process Period means the period beginning
from the pre-packaged insolvency commencement date and ending on the date on which an
order u/s 54L(1), 54N(1) or 54O(1), as the case may be, is passed by the Adjudicating
Authority.
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FLOWCHART EXPLAINING PRE PACK INSOLVENCY RESOLUTION PROCESS
(“PPIRP”)
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DIFFERENCE BETWEEN CIRP & PPIRP
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PART II
KEY HIGHLIGHTS OF PRIRP
Minimum Default (Reference Section 4 of the Code)
CG has specified minimum amount of default of Rs 10 Lakhs.
Applicant for initiating PPIPR (Reference Section 5(5) of the Code)
An application for initiating pre-packaged insolvency resolution process may be made by a corporate applicant which means
any of the following:
Corporate Debtor (“CD”).
Member or partner of the corporate debtor who is
authorized to make an application for CIRP under the
constitutional document of the corporate debtor. An individual who is in charge of managing the operations
and resources of the corporate debtor.
A person who has the control and supervision over the financial affairs of the corporate debtor.
CD eligible for
PPIRP (Reference Section 54A of the Code)
An application for initiating PPIRP may be made in respect of a CD
classified as MSME subject to the following conditions:
It has not undergone PRIRP or completed CIRP during the
period of 3 years preceding the initiation date. it is not undergoing a CIRP.
No order requiring it to be liquidated is passed under
Section 33 of the Code. CD is eligible to submit a resolution plan under section 29A
of the Code.
Appointment of IP for PPIRP (Reference Section 54A of the Code)
The financial creditors of the CD (not being its related parties) representing such number and such manner as may be
specified, have proposed the name of the insolvency
professional to be appointed as resolution professional. The financial creditors of the CD (not being its related parties)
representing not less than 66% in value of the financial debt
due to such creditors, have approved such proposal.
Where CD does not have any financial creditors, not being its related parties, the proposal and approval under this clause
shall be provided by such persons as may be specified.
Declaration from
Majority
Directors/Partners
and Special Resolution (Reference Section 54A
The majority of the directors or partners of the CD shall made a
declaration stating that CD shall file an application for
initiating PPIRP within a definite time period not
exceeding 90 days, PRIRP is not being initiated to defraud any person and name of the IP proposed and
approved to be appointed as RP.
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of the Code) The members of the CD shall pass a special resolution or resolution passed by at least 3/4 of the total number of
directors/partners of CD approving the filing of an
application for initiating PPIRP.
Prior to seeking approval from financial creditors for initiating PPIRP, CD shall provide such financial creditors with the
aforesaid declaration, the special resolution, base
resolution plan and such other information and documents as may be specified.
The CD shall obtain an approval from its financial creditors, not
being its related parties, representing not less than 66% in
value of the financial debt due to such creditors for the filing of an application for initiating PPIRP.
Duties of RP before initiation of
PPIRP (Reference Section 54B of the Code)
To prepare a report confirming whether CD meets the requirements of Section 54A of the Code and the base
resolution plan, file such reports and other documents,
with the Board and performs such other duties as may be
specified. The above duties of the IP insolvency professional shall cease,
if CD fails to file an application within the time specified
in the declaration of majority of the directors or partners or the application for initiating PPIRP is admitted or
rejected by the Adjudicating Authority.
Fees payable to RP shall be determined and borne in such manner as may be specified and such fees shall form part of
the PPIRP Costs upon admission of the application.
Application to initiate PPIRP (Reference Section 54C of the Code)
Application for initiating PPIRP shall be made in such manner and with such fees as may be prescribed and shall furnish the
declaration, special resolution or resolution, approval of
financial creditors for initiating PPIRP, the name and written consent of IP, a declaration regarding the existence of any
transactions of CD that may be within the scope of provisions in
respect of avoidance of transactions/ fraudulent or wrongful
trading and information relating to books of account of the CD. AA shall within a period of 14 days of the receipt of the
application, by an order, admit the application, if it is complete;
or reject the application, if it is incomplete. AA shall before rejecting an application, give notice to the applicant to rectify
the defect in the application within 7 days from the date of
receipt of such notice from the AA. The pre-packaged insolvency resolution process shall
commence from the date of admission of the application.
Time limit for
completion of
PPIRP shall be completed within a period of 120 days from
the pre-packaged insolvency commencement date.
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PPIRP (Reference Section 54D of the Code)
RP shall submit the resolution plan approved by the CoC to the AA within a period of 90 days from the pre-packaged
insolvency commencement date.
Where no resolution plan is approved by CoC within the period
of 90 days, RP shall on the day after the expiry of such time period, file an application with the AA for termination of PPIRP.
Moratorium (Reference Section 54E of the Code)
Upon admission of PPIRP, AA shall declare moratorium (Section 14 of the Code to apply mutatis mutandis), apply RP and cause public
announcement to be made by RP in the specified manner.
Moratorium to have effect till the termination of PPIRP.
Duties of RP
during PPIRP (Reference Section 54F of the Code)
To confirm the list of claims submitted by the CD.
To inform the creditors regarding their claims as may be
specified. To update list of claims.
To monitor the management of the affairs of the CD.
To inform the CoC about breach of any of the obligations of
the Directors/Partners. To constitute CoC and convene and attend all its meetings.
To prepare the information memorandum on the basis of
the preliminary information memorandum. To file applications for avoidance of transactions/ fraudulent
or wrongful trading.
Powers of RP during PPIRP (Reference Section 54F of the Code)
To access all books of accounts, records and information available with CD, government authorities, statutory
auditors, accountants etc.
To access the electronic records of CD from information utility having financial information of CD.
To attend meetings of members, Board of Directors and
committee of directors/partners of CD.
To appoint accountants, legal or other professionals. To collect all information relating to the assets, finances and
operations of CD for determining the financial position of
the CD and the existence of avoidance/fraudulent/wrongful transactions relating to business operations, financial
and operational payment for previous two years from
pre pack insolvency commencement date and assets and liabilities as on initiation date.
From the date of appointment of RP, the financial
institutions maintaining accounts of CD shall furnish all
information relating to CD with RP and personnel of CD, its promoters and any other person associated with the
management of CD to extend all assistance and cooperation
to RP. (Provisions of sub-sections (2) and (3) of Section 19 to apply mutatis mutandis).
The fees of RP and any expenses incurred by him shall be
determined in such manner as may be specified. CoC may
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impose limits and conditions on such fees and expenses. Fees and expenses for the period prior to the constitution of
the CoC shall be subject to ratification by it.
List of claims and preliminary
information
memorandum (Reference Section 54G of the Code)
CD shall within two days of the pre-packaged insolvency commencement date submit to RP the list
of claims along with details of the respective
creditors, their security interests and guarantees and preliminary information memorandum.
Where any person has sustained any loss or damage as a
consequence of the omission of any material information or
inclusion of any misleading information in the list of claims or the preliminary information memorandum submitted by
CD, every person who is a promoter or director or partner of
the CD at the time of submission of the list of claims or the preliminary information memorandum by CD or has
authoriZed the submission of the list of claims or the
preliminary information memorandum by CD shall be liable
to pay compensation to every person who has sustained such loss or damage.
No person shall be liable if the list of claims or the
preliminary information memorandum was submitted without his knowledge or consent.
Any person, who sustained any loss or damage as a
consequence of omission of material information or inclusion of any misleading information, shall be entitled to move a
court having jurisdiction for seeking compensation for such
loss or damage.
Management of
affairs of CD
during PPIRP (Reference Section 54H of the Code)
The management of the affairs of CD shall continue to vest
in the Board of Directors/Partners of CD subject to such
conditions that the Board of Directors/Partners of CD shall make every endeavor to protect and preserve the value of
the property of CD and manage its operations as a going
concern and shall exercise and discharge their contractual
or statutory rights and obligations in relation to the CD as may be prescribed.
Committee of Creditors (Reference Section 54I of the Code)
RP shall within a period of 7 days of the pre-packaged insolvency commencement date, constitute a CoC
based on the list of claims.
Composition of CoC shall be altered on the basis of the
updated list of claims and such alteration shall not affect the validity of any past decision of CoC.
The first meeting of CoC shall be held within 7 days of
the constitution of CoC. Provisions of Section 21 of the Code to apply mutatis
mutandis.
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Vesting management of
CD with RP (Reference Section 54J of the Code)
If during PPIRP, CoC by a vote of not less than 66% of the voting shares, resolves to vest the management of CD with
RP, RP shall make an application before AA and AA shall
pass an order vesting the management of CD with RP if the
affairs of CD have been conducted in a fraudulent manner or there has been gross mismanagement of the affairs of
CD.
Consideration and
approval of
resolution plan (Reference Section 54K of the Code)
Base Resolution Plan
CD shall submit the base resolution plan to RP within 2
days of the pre-packaged insolvency commencement date and RP shall present it to CoC. CD being a resolution
applicant may submit the base resolution plan either
individually or jointly with any other person. CoC may provide CD an opportunity to revise the base
resolution plan prior to its approval or invitation of
prospective resolution applicants.
CoC may approve the base resolution plan for submission to AA if it does not impair any claims owed by CD to
operational creditors.
If CoC does not approve the base resolution plan or base resolution plan impairs any claims owed by the CD to the
operational creditors, RP shall invite prospective resolution
applicants to submit a resolution plan or plans, to compete with the base resolution plan.
Resolution Plan
The resolution applicants submitting resolution plans shall
fulfill such criteria as may be laid down by RP with the
approval of the CoC having regard to the complexity and scale of operations of the business of CD and such other
conditions as may be specified.
RP shall provide to the resolution applicants: Basis for evaluation of resolution plans and the relevant information
referred to in section 29, which shall, mutatis mutandis
apply.
RP shall present to CoC for its evaluation, resolution plans which conform to the requirements and CoC shall evaluate
the resolution plans presented by the resolution professional
and select a resolution plan from amongst them.
Base Resolution Plan Vs. Resolution Plan
On the basis of laid down criteria if CoC decides that the
selected resolution plan is significantly better than the base
resolution plan, such resolution plan may be selected for
approval.
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If the selected resolution plan is not considered for approval or does not fulfill the specified requirements, it shall
compete with the base resolution plan and one of them shall
be selected for approval and submission to AA.
Where the selected resolution plan is not approved by CoC, RP shall file an application for termination of PPIRP.
Final Resolution Plan
The approval of the resolution plan by CoC shall be by a
vote of not less than 66% of the voting shares, after
considering its feasibility and viability, the manner of distribution proposed, taking into account the order of
priority amongst creditors as laid down in sub-section (1) of
section 53, including the priority and value of the security interest of a secured creditor and such other requirements
as may be specified.
While considering the feasibility and viability of a resolution plan, where the resolution plan submitted by CD provides
for impairment of any claims owed by the CD, the CoC may
require the promoters of the CD to dilute their shareholding
or voting or control rights in the CD. Provided that where the resolution plan does not provide for such dilution, CoC
shall, prior to the approval of such resolution plan shall
record the reasons for its approval.
Approval of
resolution plan (Reference Section 54L & 54M of the Code)
If AA is satisfied that the resolution plan as approved by the
CoC meets the specified requirements, AA shall within
thirty days of the receipt of such resolution plan, by order approve the resolution plan.
AA shall, before passing an order for approval of a
resolution plan satisfy itself that the resolution plan has provisions for its effective implementation.
Where AA is satisfied that the resolution plan does not
conform to the requirements, it may within 30 days of the receipt of such resolution plan, reject the
resolution plan and pass an order terminating PPIRP.
Where AA has passed an order u/s 54J(2) i.e vesting of
management of CD with RP and the resolution plan approved by CoC does not result in the change in the
management or control of the CD to a person who was not
a promoter or in the management or control of the CD, the AA shall pass an order: rejecting such resolution plan,
terminating PPIRP and passing a liquidation order for
CD and declaring that the PPIRP costs (if any) shall be included as part of the liquidation costs for the
purposes of liquidation of the CD.
Any appeal from an order approving the resolution plan
shall be on the grounds laid down in Section 61(3) of the
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Code.
Termination of
PPIRP (Reference Section 54N of the Code)
Where RP files an application with AA for termination of
PPIRP on account of non-approval of resolution plan
by CoC or non-approval of resolution plan by CoC within the specified time, AA shall within 30 days of the
date of such application by an order: Terminate the
PPIRP and provide for the manner of continuation of proceedings initiated for avoidance of transactions
under Chapter III or proceedings initiated under
section 66 and section 67A, if any.
Where RP at any time after the pre-packaged insolvency commencement date, but before the approval of resolution
plan intimates AA of the decision of CoC approved by a vote
of 66% to terminate PPIRP, AA shall pass an order accordingly and CD shall bear the PPIRP costs (if any).
Initiation of CIRP (Reference Section 54O of the Code)
CoC at any time after the pre-packaged insolvency
commencement date but before the approval of resolution plan by a vote of 66% of the voting shares, may resolve to
initiate CIRP of CD, if such CD is eligible for CIRP.
Notwithstanding anything to the contrary contained in Chapter II, where the resolution professional intimates the
Adjudicating Authority of the decision of the committee of
creditors under sub-section (1), the Adjudicating Authority
shall, within thirty days of the date of such intimation, pass an order to: Terminate PPIRP and initiate CIRP,
appointing same RP as IP for CIRP if consent for the
same has been duly given and PPIRP costs if any to be included in CIRP cost.
If acting RP fails to give his consent to act as IP for CIRP,
AA may appoint IP for CIRP upon reference to IBBI. Where AA passes an order for initiating CIRP, such
order shall be deemed to be an order of admission of
an application u/s 7 of the Code, CIRP shall
commence from the date of such order, the proceedings initiated for avoidance of transactions
under Chapter III or proceedings initiated u/s
66/67A shall continue during CIRP , for the purposes of Sections 43, 46 and 50, references to “insolvency
commencement date” shall mean “pre-packaged
insolvency commencement date” and in computing the relevant time or the period for avoidable
transactions, the time-period for the duration of the
PPIRP shall also be included, notwithstanding
anything to the contrary contained in Sections 43, 46 and 50 of the Code.
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PART III
INTRODUCTION OF ADDITIONAL NEW PROVISIONS
Insertion of Section 11A of the Code [Disposal of applications under Section 54C
and under Section 7/9/10]
Where an application filed u/s 54C (Application to initiate PPIRP) is pending, AA shall
pass an order to admit or reject such application, before considering any application
filed u/s 7/9/10 of the Code during the pendency of such application u/s 54C in respect
of the same CD.
Where an application u/s 54C is filed within 14 days of filing of any application
u/s 7/9/10 of the Code, which is pending in respect of the same CD, then AA shall
first dispose of the application under section 54C.
Where an application under section 54C is filed after fourteen days of the filing of
any application u/s 7/9/10 of the Code in respect of the same CD, the AA shall
first dispose of the application u/s 7/9/10 of the Code.
The provisions of this section shall not apply where an application u/s 7/9/10 of the
Code is filed and pending as on the date of the commencement of the Insolvency and
Bankruptcy Code (Amendment) Ordinance, 2021.
Insertion of Section 67A of the Code [Fraudulent management of corporate debtor
during prepackaged insolvency resolution process]
On and after the pre-packaged insolvency commencement date, where an officer of the
CD manages its affairs with the intent to defraud creditors of the CD or for any fraudulent
purpose, the AA may, on an application by the RP pass an order imposing upon any such
officer, a penalty which shall not be less than One Lakh Rupees, but may extend
to One Crore Rupees.
Insertion of Section 77A of the Code [Punishment for offences related to pre-
packaged insolvency resolution process]
Where:
a) a corporate debtor provides any information in the application under section 54C which
is false in material particulars, knowing it to be false or omits any material fact,
knowing it to be material; or
b) a corporate debtor provides any information in the list of claims or the preliminary
information memorandum submitted under sub-section (1) of section 54G which is
false in material particulars, knowing it to be false or omits any material fact, knowing
it to be material; or
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c) any person who knowingly and willfully authorized or permitted the furnishing of such
information under sub-clauses (a) and (b), such corporate debtor or person, as the
case may be;
Shall be punishable with imprisonment for a term which shall not be less than
three years, but which may extend to five years or with fine which shall not be
less than One Lakh Rupees, but which may extend to One Crore Rupees, or with
both.
If a director or partner of CD, deliberately contravenes the provisions of Chapter III-A,
such person shall be punishable with imprisonment for not less than three years,
but which may extend to five years, or with fine which shall not be less than One
Lakh Rupees, but which may extend to One Crore Rupees, or with both.
Explanation.–For the purposes of this section, and sections 75, 76 and 77, an application
shall be deemed to be false in material particulars in case the facts mentioned or omitted
in the application, if true, or not omitted from the application as the case may be, would
have been sufficient to determine the existence of a default under this Code.
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PART IV
AMENDMENTS IN THE EXISTING PROVISIONS
Amendment in Section 11 of the Code [Persons not entitled to make application]
The following persons shall not be entitled to make an application to initiate corporate insolvency resolution process under this Chapter, namely:
a corporate debtor undergoing a corporate insolvency resolution process;
a financial creditor or an operational creditor of a corporate debtor undergoing a prepackaged insolvency resolution process;
a corporate debtor having completed corporate insolvency resolution process twelve
months preceding the date of making of the application; a corporate debtor in respect of whom a resolution plan has been approved
under Chapter III-A, twelve months preceding the date of making of the
application;
a corporate debtor or a financial creditor who has violated any of the terms of resolution plan which was approved twelve months before the date of making of an
application under this Chapter;
a corporate debtor in respect of whom a liquidation order has been made.
Amendment in Section 61 of the Code [Appeals and Appellate Authority]
An appeal against a liquidation order passed under Section 33 or sub-section (4) of section 54L, or sub-section (4) of section 54N, may be filed on grounds of
material irregularity or fraud committed in relation to such a liquidation order.
An appeal against an order for initiation of corporate insolvency resolution
process passed under sub-section (2) of section 54-O may be filed on grounds of material irregularity or fraud committed in relation to such an order.
Amendment in Section 65 of the Code [Fraudulent or malicious initiation of proceedings]
If, any person initiates the insolvency resolution process or liquidation proceedings
fraudulently or with malicious intent for any purpose other than for the resolution of
insolvency, or liquidation, as the case may be, the Adjudicating Authority may impose upon a such person a penalty which shall not be less than One Lakh Rupees, but may
extend to One Crore Rupees.
If, any person initiates voluntary liquidation proceedings with the intent to defraud any
person, the Adjudicating Authority may impose upon such person a penalty which shall
not be less than One Lakh Rupees but may extend to One Crore Rupees.
If, any person initiates the pre-packaged insolvency resolution process
fraudulently or with malicious intent for any purpose other than for the
resolution of insolvency; or with the intent to defraud any person, the
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Adjudicating Authority may impose upon such person a penalty which shall
not be less than One Lakh Rupees, but may extend to One Crore Rupees.”
Amendment in Section 65 of the Code [Functions and obligations of insolvency
professionals]
Where any insolvency resolution, fresh start, liquidation or bankruptcy process has
been initiated, it shall be the function of an insolvency professional to take such actions
as may be necessary, in the following matters, namely: –
a) a fresh start order process under Chapter II of Part III;
b) individual insolvency resolution process under Chapter III of Part III;
c) corporate insolvency resolution process under Chapter II of Part II;
d) pre-packaged insolvency resolution process under Chapter III-A of Part
II;
e) individual bankruptcy process under Chapter IV of Part III; and
f) liquidation of a corporate debtor firm under Chapter III of Part II
After sub-section (1), the following sub-section shall be inserted, namely:–
Where the name of the insolvency professional proposed to be appointed as a
resolution professional, is approved under clause (e) of sub-section (2) of
section 54A, it shall be the function of such insolvency professional to take
such actions as may be necessary to perform his functions and duties prior to
the initiation of the pre-packaged insolvency resolution process under
Chapter III-A of Part II.”