To quicken the pace of stressed asset resolution, the Centre may soon come up with a Pre-packaged Insolvency framework under the IBC for large corporates, similar to the one introduced for MSMEs.
The decision on this may be taken once state-owned bad bank – National Asset Reconstruction Co. Ltd (NARCL) is operationalised.
Previously in April Pre-packaged Insolvency Resolution Plan (PPIRP) for Micro, Small and Medium Enterprises (MSMEs) was introduced which was based on the debtors in possession model which involves a resolution professional monitoring the entire process to ensure transparency.
"Pre-packaged resolution process can accelerate resolutions. apart from removing structural/ legal hurdles in IBC, a pre-packaged resolution for large corporates is the way to go, similar to the one being introduced for MSMEs," Emkay Global has said in its analysis based on experts' opinion.
These resolution packages are typically cleared by the NCLT in 2-3 sittings and have been a big success in MSMEs. In fact, one circle of SBI could clear nearly 200 resolutions via PPIRP. Since NARCL will aggregate the corporate debt and will act as a one-stop-shop for buyers, PPIRP could be successful under this structure, experts have opined.
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