According to the amendments, the government has notified a threshold for default – not exceeding ₹1 crore -- at which point a pre-packaged resolution process may be initiated. Pre-packs, which are popular in many developed countries, are seen as a smoother way to resolve bankruptcies unlike the conventional insolvency resolution process. The pre-pack insolvency resolution process (PIRP) is in contrast to the corporate insolvency resolution process (CIRP) that has been used under the IBC to sell or liquidate troubled businesses till now. When a distressed business is admitted to a bankruptcy court, the control of the business is transferred to a resolution professional. Many have also demanded that the scope of the pre-pack resolution process be widened further.

Source: The Hindu July 31, 2021 05:03 UTC