A Comparative Analysis of Indian Pre-packaged Insolvency Process with that of US and UK

Pre-packs, as the name implies, are reorganisation plans that have been reached by the debtor and its creditors before declaring insolvency and have been subsequently recognised by adjudicatory authorities. Pre-packaged bankruptcy, or “Pre-packs,” has its origins in the United States and the United Kingdom but has lately been included into the Indian bankruptcy system. A casual settlement between creditors and debtors is reached in this type of restructuring before it is submitted for approval. MSMEs enterprises are often operated by medium and tiny promoters, making it not difficult to re-correct them, if the administration is removed under the regular CIRP. While the most recent Insolvency and Bankruptcy Code, 2016, has helped to improve the statistics on stressed assets, it is still going through some teething problems and has room for additional changes, such as the introduction of Pre-packs. In light of this context, the current study will concentrate on the fundamental aspects of the bankruptcy system in India and the market performance of prepacks under the current regulatory framework. Additionally, it examines the corporate insolvency procedure in India, identifies specific obstacles to prepack adoption, and presents a summary of the benefits and drawbacks of prepacks. Finally, it focuses on pre-packaged insolvency resolution processes in India using best practises from the US and UK.