Union Finance Minister Nirmala Sitharaman introduced Insolvency and Bankruptcy Code (Amendment) Bill 2021 in Lok Sabha amid opposition ruckus over various issues.

On April 4, 2021, President Ram Nath Kovind, promulgated the Insolvency and Bankruptcy Code (Amendment) Ordinance, 2021 to offer an alternate bankruptcy resolution scheme for Micro, Small and Medium Enterprises (MSMEs).

Generally, under a pre-packaged process, main stakeholders such as creditors and shareholders come together to identify a prospective buyer and negotiate a resolution plan before approaching the National Company Law Tribunal (NCLT).

All resolution plans under the IBC need to be approved by NCLT.

The minimum payment default threshold to avail of this scheme is Rs. 10 lakh.