With the Insolvency and Bankruptcy Code (IBC) currently suspended, an alternate and complementary mechanism to the Corporate Insolvency Resolution Process (CIRP) is the Pre-packaged Insolvency Resolution Process (PPIRP). In a broad area of corporate restructuring, the PPIRP is a subset where the terms of restructuring usually take place prior to the filing of the insolvency procedure.
The essence of a PPIRP is that it aims to protect the enterprise value of the business while safeguarding the interests of the creditors. The company in distress notifies its stakeholders and creditors about the proposal to negotiate a framework for a resolution plan, leading to an out-of-court settlement. Within the corporate arena, liquidation poses a major threat to any company, but unfortunately it is the automatic result of a failure of the CIRP. It is proposed that the PPIRP be introduced in a manner where creditors are mandated to initiate it first, and only upon its failure should they proceed for filing of the CIRP before the adjudicating authority.
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