CURRENT AFFAIRS

Detailed explanation-1: -Threshold: An MSME may trigger the PIRP for defaults of amounts between INR 10, 00, 0003 (Indian Rupees Ten Lakhs only) and INR 1, 00, 00, 000 (Indian Rupees One Crore only).

Detailed explanation-2: -The pre-pack framework will be applicable for MSMEs with a maximum default value of Rs 1 crore only. It can be filed under a newly inserted Section 54C of the IBC. For defaults of more than Rs 1 crore, IBC or other resolution mechanisms can continue to be used.

Detailed explanation-3: -If the default amounts range anywhere between Rs 10 lakh to Rs 1 crore, the pre-packaged insolvency process kicks in. If the defaults are higher than the said amount, a corporate insolvency resolution process under the IBC would be initiated.

Detailed explanation-4: -The quantum of defaulted amount, if default is more than one case, shall be not less than Rs. 1 crore. If it is below Rs. 1 crore, application for corporate insolvency resolution process cannot be initiated by the operational creditor against the corporate debtor.

Detailed explanation-5: -Section 4 along with Sections 7 to 10 of the Code enable a financial creditor, an operational creditor or a corporate applicant to initiate a CIRP under the Code on a single-day default of at least INR 1 lakh only.