Pre-Packaged Insolvency Resolution Process (Why Slow Progress?)

Abstract

The Indian Government has introduced a significant economic and legislative reform known as the Pre-Packaged Insolvency Resolution Process (PPIRP) to bolster corporate MSMEs, which plays a vital role in the Indian economy. This particular process offers a comprehensive framework for the revival and resolution of MSMEs, yet unfortunately, its significance has not been widely recognized. Consequently, the implementation of this process has faced challenges in its current phase. Micro, small, and medium enterprises (MSME) are governed by the MSMED Act. Sections 15 to 23 of the Act outline a specialized mechanism for resolving disputes and enforcing specific business and contractual terms. The Amendment Ordinance of 2021 to the Insolvency and Bankruptcy Code introduced the novel concept of "Pre-Packaged Insolvency Resolution Process" within the framework of the Insolvency and Bankruptcy Code of 2016. The primary aim of PPIRP is to offer an alternative resolution mechanism for MSMEs, ensuring expeditious, cost-effective, and value-optimizing results for all stakeholders. Nevertheless, the utilization of the PPIRP procedure is hindered by inadequate dissemination and comprehension within the industry in comparison to the Corporate Insolvency Resolution Process (CIRP).