Hindustan Times (Jammu)

MSMEs to pay ₹15K to move NCLT

- Gireesh Chandra Prasad gireesh.p@livemint.com

Small businesses that are on the verge of collapse can initiate the new bankruptcy resolution scheme by paying a fee of ₹ 15,000, according to rules notified by the government under the ‘pre-pack’ resolution scheme.

The corporate affairs ministry has brought out the finer details of the procedure to be followed by small businesses while moving a tribunal with a turnaround plan backed by shareholde­rs and creditors. The paperwork required at the time of filing, which involves 16 annexures along with the applicatio­n, suggests that the groundwork done should be extensive so that no time is lost at the tribunal.

The fee for small businesses to file for pre-pack resolution scheme is less than the ₹25,000 applicable under the general bankruptcy code provisions. With the rules on the finer aspects of the pre-pack scheme and the forms to be used notified, the scheme is fully operationa­l now.

Under the scheme, lenders have extensive oversight but the business in distress enjoys moratorium from all recovery proceeding­s and remains in control of the operations so that there is no disruption to business and employment. “It is informal up to a point and formal thereafter. It blends debtor in possession with creditor in control. It is neither a fully private nor a fully public process. It allows the company, if eligible under section 29A (which disqualifi­es wilful defaulters), to submit the base resolution plan that is exposed to Swiss challenge for value maximisati­on,” Insolvency and Bankruptcy Board of India ( IBBI) Chairman M. S. Sahoo said in a quarterly newsletter of the regulatory body.

The pre-pack scheme safeguards the rights of stakeholde­rs and has adequate checks and balances to prevent any potential misuse, Sahoo said. It offers a quick turnaround opportunit­y without business disruption to MSMEs.

Almost 60% of the more than 13 lakh active companies in the country will be eligible for the scheme. It, however, is not applicable to businesses that are unincorpor­ated.

 ?? MINT ?? The fee for MSMEs to file for pre-pack resolution scheme is less than ₹25,000 applicable under the IBC.
MINT The fee for MSMEs to file for pre-pack resolution scheme is less than ₹25,000 applicable under the IBC.

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