Extend prepack to big firms: Industry

As Finance Minister Nirmala Sitharaman, in her Budget speech, hinted at impending changes to the Insolvency and Bankruptcy Code (IBC), industry experts suggest priorities should include extending pre-packaged insolvency to larger firms, codifying group insolvency norms, and clarifying project-wise insolvency processes.

- SUBRATA PANDA

The minister announced plans to reform and strengthen tribunals to expedite insolvency resolution, establish more tribunals, and assign some exclusively to cases under the Companies Act.

Madhav Kanoria, partner at Cyril Amarchand Mangaldas, advocated for extension of pre-packaged insolvency to additional categories of companies. According to him, a process must be robust involving National Company Law Tribunals (NCLTS) only for the approval of the final resolution plan. This would help save businesses from bankruptcy, especially ones caused due to the cyclical nature of the business, he said. Currently, prepackaged insolvency is limited to MSMEs and involves negotiations on a resolution plan between the debtor and its creditors before initiating the formal resolution process.

So far, the process has yielded a 25 per cent realisation against admitted claims in five approved cases.