Why in the news?
The Ministry of Corporate Affairs (MCA) has set up a committee to look into the possibility of including what are called “pre-packs” under the insolvency regime to offer faster insolvency resolution under the Insolvency and Bankruptcy Code (IBC).
Basic facts
Slow progress in the resolution of distressed companies has been one of the key issues raised by creditors regarding the Corporate Insolvency Resolution Process (CIRP) under the IBC .
A pre-pack is an agreement for the resolution of the debt of a distressed company through an agreement between secured creditors and investors instead of a public bidding process.
According to some experts, pre-pack would act as an important alternative resolution mechanism to the CIRP and would help lower the burden on the NCLTs.
(Source: Indian Express)
