As on May 30, 2023, six cases have been admitted under the PPIRP – Lok Sabha question and answer 07.08.2023

Unstarred Question No.150 – Minister of State for Micro, Small and Medium Enterprises (a) the current status of implementation of […]

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Unstarred Question No.150 – Minister of State for Micro, Small and Medium Enterprises

(a) the current status of implementation of Pre-Packaged Insolvency Resolution Process (PPIRP) for MSME sector since its implementation in 2021;

(b) whether it is true that only four cases have been admitted under PPIRP for MSMEs during the last two years of its implementation;

(c) if so, the reasons therefor;

(d) whether it is true that MSMEs are in favour of One Time Settlement rather than PPIRP; and

(e) if so, whether the Government would push for OTS instead of PPIRP and if so, the details thereof?

Answer:

(a) & (b): As per the information provided by the Ministry of Corporate Affairs (MCA), the framework envisages that Pre-Packaged Insolvency Resolution Process (PPIRP) can be initiated by eligible MSME corporate debtor who has made a default of not less than Rs. 10 lakh and has not undergone or is not undergoing insolvency process under Part-II of the Insolvency and Bankruptcy Code (Code). However, the debtor will file for insolvency resolution after approval of name of resolution professional by creditors. So, the framework requires prior discussion and agreement between debtor and creditors. The framework envisages debtor-in-possession model during the process with well-designed checks and balances.

As per the information available with the Insolvency and Bankruptcy Board of India (IBBI), as on May 30, 2023, six cases have been admitted under the PPIRP, out of which one case is withdrawn, one case is resolved, and four cases are ongoing.

(c): Under Section 54 C of the Code, the choice of initiating the process rests with the corporate applicant, who is at liberty to weigh various options in resolving the distress of the corporate debtor before choosing an option.

(d) & (e): No information regarding the one-time settlement is available with MCA/IBBI

Unstarred Question No. 2846 – Ministry of Corporate Affairs

(a) whether the Government has constituted Company Law Committee (CLC) to make recommendations to the Government on changes aimed at facilitating and promoting greater ease of doing business in the country;

(b) if so, the details thereof;

(c) whether the CLC has submitted its latest report to the Government;

(d) if so, the details thereof and the recommendations made therein;

(e) whether the Government has drafted the legislative changes required in the Companies Act, 2013 as suggested by the CLC;

(f) if so, the details thereof; and

(g) the steps being taken by the Government for the implementation of recommendations of the CLC?

Answer:

(a) to (g):- In line with the Government’s objective of promoting Ease of Living in the country by providing Ease of Doing Business to law abiding corporates, fostering improved corporate compliance for stakeholders and also to address emerging issues having impact on the working of corporates in the country, the Company Law Committee (CLC) has been constituted for examining and making recommendations to the Government on various provisions and issues pertaining to implementation of the Companies Act, 2013 and the Limited Liability Partnership (LLP) Act, 2008.

The CLC has submitted its latest Report (2022) to the Government on 21st March, 2022 containing various recommendations for amendments in the Companies Act, 2013 and the LLP Act, 2008. The recommendations made broadly relate to (i) promoting further ease of doing business for law-abiding corporates; (ii) strengthening existing regulatory practices under the Companies Act to streamline and improve the operational efficiency of the Act; (iii) recognising new concepts in light of the rapidly evolving corporate landscape and changing business practices; (iv) carrying out drafting and clarificatory changes to remove ambiguities and inconsistencies.

The report was placed on the website of the Ministry for public comments. Consultations with the concerned Ministries and Departments of Government are being undertaken on the proposals relating to the amendments in Companies Act, 2013 and LLP Act, 2008.



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