2021-03-11 07:46:57
The above is news from Indian Express. Let us discuss some relevant points:
1) Under the IBC 2016, whenever an insolvency process is initiated by the creditor/debtor then the moment NCLT (under IBC 2016) accepts the application,
the MANAGEMENT of the company passes in the hands of the "Creditors" ( which the creditors manage through Insolvency Resolution Professionals). This is a very important feature of the Corporate Insolvency Resolution Process under IBC 2016. So, while the case is going on under IBC 2016, the Debtor (the promoters) of the company cant intervene/manipulate in the business and cant siphon of funds out of the company. [Earlier before IBC 2016, the management used to remain with the debtors (promoters) and they used to siphon of the funds out of the company and manipulate the business while the court cases used to drag on]
2) For, MSMEs, govt. during the pandemic had promised that it will bring a special framework or pre-pack mechanism for resolution of MSMEs under IBC 2016. So, now as per the news article it will be called a "
Pre Pack Scheme" for MSMEs: the important feature of this is
(a) the Management of the debtor (i.e. the MSME company) will remain with the previous promoters (of the MSME) while the corporate insolvency resolution process will continue under NCLT.
(b) It will adhere to a fix time line of 90 days for submission of resolution plan/mechanism and 30 days for its approval by NCLT
For more details of the IBC 2016 process, look into the new edition of the book chapter 3.11
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