Corporate debtors eligible for pre-packaged insolvency resolution process [ Section 54A ] - Insolvency Resolution And Liquidation For Corporate Persons - IBC

Corporate debtors eligible for pre-packaged insolvency resolution process Important means Base resolution plan means a resolution plan provided by the corporate debtor under section 54A(4)(c) [ Section 5(2A) ] Pre-packaged insolvency commencement date means the date of admission of an application for initiating the pre-packaged insolvency resolution process by the Adjudicating Authority under section 54C(4)(a) . [Section 5(23B)] Preliminary Information Memorandum means a memorandum submitted by the corporate debtor under section 54G((1)(b) . [ Section 5(23A) ] Pre-packaged insolvency resolution process costs means a the amount of any interim finance and the costs incurred in raising such finance; b the fees payable to any person acting as a resolution professional and any expenses incurred by him for conducting the pre-packaged insolvency resolution process during the pre-packaged insolvency resolution process period, subject to section 54F(6) ; c any costs incurred by the resolution professional in running the business of the corporate debtor as a going concern pursuant to an order under of section 54J(2) ; d any costs incurred at the expense of the Government to facilitate the prepackaged insolvency resolution process; and e any other costs as may be specified. [Section 5(23C)] Pre-packaged insolvency resolution process period means the period - beginning from the pre-packaged insolvency commencement date; and ending on the date on which an order under section 54L(1) , or section 54N(1) , or section 54O(2) , as the case may be, is passed by the Adjudicating Authority. [ Section 5(23D) ] Corporate debtors eligible for pre-packaged insolvency resolution process (PPIRP) [ Section 54A ] Filing an application for initiating pre-packaged insolvency Resolution process [ Section 54A(1) ] An application for initiating pre-packaged insolvency resolution process may be made in respect of a corporate debtor classified as a micro, small or medium enterprise under section 7(1) of the Micro, Small and Medium Enterprises Development Act, 2006. (2) Without prejudice to section 54A(1 ) , an application for initiating pre-packaged insolvency resolution process may be made in respect of a corporate debtor, who commits a default referred to in section 4, subject to the following conditions , that (a) it has not undergone pre-packaged insolvency resolution process or completed corporate insolvency resolution process, as the case may be, during the period of three years preceding the initiation date ; (b) it is not undergoing a corporate insolvency resolution process; (c) no order requiring it to be liquidated is passed under section 33 ; (d) it is eligible to submit a resolution plan under section 29A ; (e) the financial creditors of the corporate debtor , not being its related parties, representing such number and such manner as may be specified, have proposed the name of the insolvency professional to be appointed as resolution professional for conducting the pre-packaged insolvency resolution process of the corporate debtor, and the financial creditors of the corporate debtor, not being its related parties, representing not less than 66% . in value of the financial debt due to such creditors, have approved such proposal in such form as may be specified: Provided that where a corporate debtor does not have any financial creditors , not being its related parties, the proposal and approval under this clause shall be provided by such persons as may be specified; (f) the majority of the directors or partners of the corporate debtor , as the case may be, have made a declaration, in such form as may be specified, stating, inter alia, - (i) the corporate debtor shall file an application for initiating pre-packaged insolvency resolution process within a definite time period not exceeding 90 days ; (ii) that the pre-packaged insolvency resolution process is not being initiated to defraud any person ; and (iii) the name of the insolvency professional proposed and approved to be appointed as resolution professional under clause (e); (g) the members of the corporate debtor have passed a special resolution, or at least three-fourth of the total number of partners, as the case may be, of the corporate debtor have passed a resolution, approving the filing of an application for initiating pre-packaged insolvency resolution process. [ Section 54A(2) ] Obtaining approval by the corporate debtor from financial creditor [ Section 54A(3) ] (3) The corporate debtor shall obtain an approval from its financial creditors, not being its related parties, representing not less than 66% . in value of the financial debt due to such creditors, for the filing of an application for initiating pre-packaged insolvency resolution process, in such form as may be specified: Provided that where a corporate debtor does not have any financial creditors, not being its related parties, the approval under this sub-section shall be provided by such persons as may be specified. Providing Base Resolution Plan alongwith special resolution to financial creditor [ Section 54A(4) ] Prior to seeking approval from financial creditors under section 54A(3), the corporate debtor shall provide such financial creditors with - (a) the declaration referred to in clause (f) of section 54A(2); (b) the special resolution or resolution referred to in clause (g) of section 54A(2); (c) a base resolution plan which conforms to the requirements referred to in section 54K , and such other conditions as may be specified; and (d) such other information and documents as may be specified. Approvals by financial creditors Regulation 14 IBBI (Pre-packaged Insolvency Resolution Process) Regulations, 2021 (1) For the purposes of clause (e) of section 54A(2) and section 54A(3), the applicant shall convene meetings of the financial creditors, who are not related parties of the corporate debtor. (2) The notice of the meeting under regulation 14(1) shall be served to the financial creditors, who are not related parties of the corporate debtor, at least 5 days before the date of the meeting, unless a shorter time is agreed to by all of them. (3) The notice of the meeting under this regulation shall indicate the date, time and venue of the meeting, and enclose a list of creditors along with the amount due to them in Form P2. (4) The financial creditors who are not related parties of the corporate debtor and have not less than ten per cent. of the value of the total financial debt of such creditors may propose names of insolvency professionals for the purposes of clause (e) of section 54A(2). (5) The approval of the terms of appointment of resolution professional under clause (e) of section 54A(2) shall be in Form P3. (6) The terms of appointment of the resolution professional under this regulation shall include (a) fee payable to him for performing duties under section 54B(1) ; (b) fee payable to him and expenses to be incurred by him for conducting the process; and (c) fee payable to him and expenses to be incurred by him in case management of the corporate debtor is vested with him under section 54J. (7) The approval for filing of application under section 54A(3) shall be in Form P4 . (8) Where the corporate debtor has no financial debt or where all financial creditors are related parties, the applicant shall convene a meeting of operational creditors, who are not related parties of the corporate debtor and provisions of regulations 14(1) to 14(7) of IBBI (Pre-packaged Insolvency Resolution Process) Regulations, 2021 shall mutatis mutandis apply. Eligibility for PPIRP A CD, which is an MSME under section 7(1) of the Micro, Small and Medium Enterprises Development Act, 2006, is eligible to apply for initiation of PPIRP, if it- has committed a default of at least Rs 10 lakh ; [ Notification No. S.O.1543(E) Dated 09.04.2021 ] is eligible to submit a resolution plan under section 29A of the Code; has not undergone a PPIRP during the 3 years preceding the initiation date; has not completed a CIRP during he 3 years preceding the initiation date;