The Ministry of Corporate Affairs has set up a committee to look into the possibility of including what are called ‘pre-packs’ under the current insolvency regime to offer faster Insolvency and Bankruptcy Code (IBC), while maintaining business continuity and thereby preserving asset value and jobs.
What is a pre-pack?
- A pre-pack is an agreement for the resolution of the debt of a distressed company through an agreement between secured creditors and investors instead of a public bidding process.
- This system of insolvency proceedings has become an increasingly popular mechanism for insolvency resolution in the UK and Europe over the past decade.
- In India’s case, such a system would likely require that financial creditors agree on terms with potential investors and seek approval of the resolution plan from the National Company Law Tribunal (NCLT).
- This process would likely be completed much faster than the traditional CIRP which requires that the creditors of the distressed company allow for an open auction for qualified investors to bid for the distressed company.
- Slow progress in the resolution of distressed companies has been one of the key issues raised by creditors regarding the Corporate Insolvency Resolution Process (CIRP) under the IBC with 738 of 2,170 ongoing insolvency resolution processes having already taken more than 270 days at the end of March.
- Under the IBC, stakeholders are required to complete the CIRP within 330 days of the initiation of insolvency proceedings.
Benefits of pre-pack
- In the case of pre-packs, the incumbent management retains control of the company until a final agreement is reached.
- The transfer of control from the incumbent management to an insolvency professional as is the case in the CIRP leads to disruptions in the business and loss of some high-quality human resources and asset value.
- The key drawback of a pre-packaged insolvency resolution is the reduced transparency compared to the CIRP as financial creditors would reach an agreement with a potential investor privately and not through an open bidding process.
- Experts said this could lead to stakeholders such as operational creditors raising issues of fair treatment when financial creditors reach agreements to reduce the liabilities of the distressed company.
- Unlike in the case of a full-fledged CIRP which allows for price discovery, in the case of a pre-pack the NCLT would only be able to evaluate a resolution plan based on submissions by the creditors and the investor.
Sree Sree Joykali Matar Temple
The High Commissioner of India to Bangladesh has jointly inaugurated the reconstructed Sree Sree Joykali Matar temple at Natore with the State Minister of ICT Zunaid Ahmed Palak.
- The MoU for the reconstruction of the temple at Lalbazar, Natore was signed in 2016. The Government of India provided a grant assistance of Taka 97 lakh for the reconstruction of the historic temple under its High Impact Community Development Project (HICDP).
- The Government of India provides developmental assistance to Bangladesh for the direct benefit of local communities under its High Impact Community Development Projects (HICDPs) scheme.
- Several projects in the Rajshahi division including construction of Ramakrishna Temple, a two storied Adibasi Shagshoil School and Niamatpur Girls’ Hostel, Small Developments Projects at Rajshahi City Corporation, restoration of Sree Sree Anandomoyee Kali Mata Mandir, construction of ground floor and first floor of Mahiganj Girls’ High School and college etc. have been taken up under this scheme in Bangladesh.
About the temple
- The Sree Sree JoyKali Matar temple is among the oldest temples in Bangladesh. It was built approximately 300 years back in the early 18th century by Shri Dayaram Roy. He was an influential Dewan of Queen Bhahani of Natore and the founder of Dighapatia Royal Family.