Pre-Packaged Insolvency In India: A Shift In The Reformation Of Corporations
- IJLLR Journal
- Oct 19, 2023
- 1 min read
Harshika Mehta, LL.M, Gujarat National Law University
INTRODUCTION
In recent times, India has implemented substantial reforms in its insolvency landscape with the objective of establishing a strong and effective system to address business crises. One significant advancement in this context pertains to the implementation of pre-packaged insolvency resolution, a method designed to enhance the efficiency of the insolvency procedure and expedite corporate restructuring. This article explores the notion of pre-packaged insolvency in the context of India, examining its importance, execution, obstacles, and potential ramifications for the economy.
THE COMPREHENSION OF PRE-PACKAGED INSOLVENCY
Pre-packaged insolvency, denotes a method of resolving insolvency whereby a financially troubled company collaborates with its creditors to develop and establish a restructuring plan prior to commencing the official insolvency procedures. The primary distinguishing factor lies in the fact that the restructuring plan is formulated and mutually accepted before the commencement of the bankruptcy procedure, thereby enabling a prompt and effective resolution upon the initiation of said process. The importance of pre-packaged insolvency arrangements lies in their ability to provide a streamlined and efficient process for companies facing financial distress. By allowing a company to negotiate and agree on a restructuring plan with its creditors prior The expeditious settlement procedure is a significant benefit associated with pre-packaged insolvency. Conventional insolvency proceedings as per the Insolvency and Bankruptcy Code (IBC) can include protracted litigation and intricate negotiations.
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