Limited interest, low recoveries: Prepack insolvency scheme in slow lane

In the three years since its launch, the prepackaged insolvency resolution process has had a slow start, with limited interest from micro, small, and medium enterprises (MSMEs) and lower recoveries than the normal corporate insolvency resolution process.
 

In 2021 when the country was reeling from the Covid-19 pandemic, the government promulgated an ordinance and amended the insolvency law to help MSMEs avoid bankruptcy. However, the prepack scheme has not attracted many takers due to lack of advocacy, awareness, and a structure more formal than intended.
 

“We made it a non-starter by hardcoding the informal part of the prepack process in