Pre-pack inclusions under inter-ministerial consideration,
The government had also raised the threshold for initiation of insolvency proceedings to Rs 1 crore from Rs 1 lakh to prevent small companies from facing insolvency proceedings.
The government is not planning to extend the moratorium on new insolvency proceedings under the Insolvency and Bankruptcy Code (IBC), which is set to expire on March 24, according to officials.
The government, in June, granted a moratorium on the initiation of insolvency proceedings for any defaults occurring March 25 onwards for a period of 12 months — leading to only 161 insolvency petitions that were related to earlier defaults being admitted during the first half of this fiscal, compared to 889 cases in the year-ago period. The government had also raised the threshold for initiation of insolvency proceedings to Rs 1 crore from Rs 1 lakh to prevent small companies from facing insolvency proceedings.
“No Bill is being framed, so there is no scope for an extension to the moratorium,” said an official, adding moratorium would be lifted completely and will not be extended for any distressed sectors.
“This cannot be revoked in a phased manner”, said the official. The official also said that a proposal to include pre-packs as a resolution mechanism under the IBC was at an advanced stage and was undergoing inter-ministerial discussions. A pre-pack mechanism allows creditors to enter into an agreement with an investor directly instead of opening up a public bidding process.