The IBBI invites public comments on the proposed amendments to the MSME registration and disclosure framework under the CIRP.
The Insolvency and Bankruptcy Board of India (IBBI) has issued a Discussion Paper regarding proposed amendments to the Corporate Insolvency Resolution Process (CIRP) regulations, specifically addressing the disclosure of Micro, Small, and Medium Enterprises (MSME) status.
Background and Context
MSMEs are crucial to India's economic framework, significantly impacting employment and GDP. The Insolvency and Bankruptcy Code, 2016 (Code) offers specific benefits to MSMEs during insolvency proceedings, such as exemptions from certain disqualifications and eligibility for pre-packaged insolvency resolution processes (PPIRP). However, the current framework under Regulation 36 of the IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 (CIRP Regulations) does not mandate the disclosure of a corporate debtor's MSME status in the Information Memorandum (IM), leading to potential ambiguities and disputes during the resolution process.
Proposal for Amendment
To address these issues, it is proposed to amend Regulation 36 of the CIRP Regulations to require explicit disclosure of a corporate debtor's MSME status. This amendment aims to clarify the debtor’s classification, reduce information asymmetry, and potentially increase the participation of resolution applicants who seek MSMEs due to their distinct advantages, such as simplified compliance and government incentives. The proposal includes provisions for obtaining an Udyam Registration Certificate, if available, to validate the MSME status before disclosure.
Objectives of the Amendment
The proposed amendment is intended to streamline the insolvency resolution process for MSMEs, enhancing transparency and encouraging more resolution applicants to participate by providing clear information on MSME status. This is expected to facilitate better outcomes in value maximization during the resolution process.
Invitation for Public Comments
The IBBI invites comments on the proposed amendments and the draft regulations provided in the Annexure. Stakeholders are encouraged to submit their feedback electronically by 12th September 2024 through the IBBI website, following the outlined process for categorizing and detailing their comments.
Submission Process
Comments may be submitted electronically by 12th September, 2024. For providing comments, please follow the process as under:
Visit IBBI website, www.ibbi.gov.in;
Select ‘Public Comments’;
Select ‘Discussion paper – Disclosure of MSME Status in the Information Memorandum’
Provide your Name, and Email id;
Select the stakeholder category, namely, - a) Corporate Debtor; b) Personal Guarantor to a Corporate Debtor; c) Proprietorship firms; d) Partnership firms; e) Creditor to a Corporate Debtor; f) Insolvency Professional; g) Insolvency Professional Agency; h) Insolvency Professional Entity; i) Academics; j) Investor; or k) Others.
Select the kind of comments you wish to make, namely, a) General Comments; or b) Specific Comments.
If you have selected ‘General Comments’, please select one of the following options:
(a). Inconsistency, if any, between the provisions within the regulations (intra regulations);
(b). Inconsistency, if any, between the provisions in different regulations (inter regulations);
(c). Inconsistency, if any, between the provisions in the regulations with those in the rules;
(d). Inconsistency, if any, between the provisions in the regulations with those in the Code; Page 2 of 5
(e). Inconsistency, if any, between the provisions in the regulations with those in any other law;
(f). Any difficulty in implementation of any of the provisions in the regulations;
(g). Any provision that should have been provided in the regulations, but has not been provided; or
(h). Any provision that has been provided in the regulations but should not have been provided.
And then write comments under the selected option.
If you have selected ‘Specific Comments’, please select para number and write comments under the selected para number.
You can make comments on more than one para, by clicking on more comments and repeating the process outlined above from point 1.6 (vi) onwards.
Click ‘Submit’ if you have no more comments to make.
Comments