The Government on Wednesday provided major relief to MSMEs facing insolvency proceeding under the Insolvency & Bankruptcy Code Ordinance, 2018 by allowing promoters to bid for his enterprise undergoing Corporate Insolvency Resolution Process (CIRP).
The President’s assent to the IBC Amendment Ordinance 2018 has brought in key changes for home buyers and MSMEs. According to a Government statement, MSMEs form the backbone of the Indian economy as the biggest employer, next only to the agriculture sector. Recognizing the importance of MSME Sector in terms of employment generation and economic growth, the Ordinance empowers the Government to provide them with a special dispensation under the Code.
The immediate benefit it provides is that, it does not disqualify the promoter to bid for his enterprise undergoing Corporate Insolvency Resolution Process (CIRP) provided he is not a willful defaulter and does not attract other disqualifications not related to default. It also empowers the Central Government to allow further exemptions or modifications with respect to the MSME Sector, if required, in public interest.
“The Insolvency & Bankruptcy Code Ordinance, 2018 will also boost the Micro, Small and Medium Enterprises (MSME) Sector by giving them a Special dispensation in the insolvency process. Exemption from various provisions in the Resolution Process will help them turnaround faster. Corporate Debtor having an Annual Turnover up to Rs. 250 crore will also have benefits as applicable to MSMEs,” said the Ministry of Finance in a series of Tweets.
Other changes include reduction of voting threshold from 75% to 66% for all major decisions, laying down of strict procedure for withdrawal of cases post admission but prior to publication of notice inviting Expressions of Interest (EoI) under IBC 2016, participation of all classes of financial creditors through authorized representation in CoC and that the NPA shall not disqualify the resolution application during the currency of the three-year grace period , according to a government statement.