Special insolvency relief framework for Covid-hit MSMEs in the works

Such firms may be allowed to opt for pre-packaged deal

With the suspension of the Insolvency and Bankruptcy Code (IBC) coming to an end, the government is preparing a special relief framework for medium and small enterprises that are still grappling with the pandemic crisis.

Under this, the Centre is planning to introduce in the code special provisions that could be part of the relief framework for micro, small, and medium enterprises (MSMEs).

The provisions under consideration include allowing MSMEs to opt for pre-package deals by which promoter and creditor can reach out-of-court settlements on debt resolution. At present, there is no legal framework for this. Those will give powers to firms