Pre-Packaged Insolvency Resolution (PPIRP) under IBC: Expedited Debtor-in-Possession Debt Restructuring for MSMEs

Published: February 04, 20256 min readEffective: Operational across all NCLT Benches

View Official Gazette / Govt Source Consult Senior Partner

Executive Regulatory Summary

Chapter III-A of the Insolvency and Bankruptcy Code provides an expedited, cost-effective debt restructuring framework exclusively for Micro, Small, and Medium Enterprises (MSMEs). Key insights on the debtor-in-possession model, 120-day resolution timeline, base resolution plan submission, and creditor approvals.

Key Statutory Takeaways

Available to incorporated MSME corporate debtors with default thresholds between ₹10 Lakh and ₹1 Crore.
Debtor-in-possession: Existing management continues running business operations under supervision of Resolution Professional.
Fast-track statutory deadline of 120 days from admission to approval by NCLT.
Requires approval of 66% of financial creditors for initiating the pre-pack process.

Actionable Compliance Checklist for Businesses

Step-by-step advisory measures prescribed by ASGR and CO for immediate adherence:

1Verify UDYAM MSME registration status and confirm default amount satisfies statutory thresholds.

2Prepare a comprehensive Base Resolution Plan with financial projections and proposed creditor hair-cuts.

3Convene formal meeting of unrelated financial creditors to secure 66% voting consent in Form P2.

4File formal admission application in Form P1 before the jurisdictional National Company Law Tribunal (NCLT).

1. Why PPIRP Prevents Commercial Value Destruction

Unlike standard Corporate Insolvency Resolution Process (CIRP) where promoters are ousted, PPIRP keeps the founders at the helm, maintaining customer trust, employee retention, and enterprise continuity while restructuring debt.

Target Entities Governed by this Notification:

MSME Promoters Facing Working Capital DistressCommercial Bank Stressed Asset VerticalsInsolvency Professionals (IPs)Turnaround & Restructuring Specialists

Advisory Published By

CA Nitin Singrodia

Partner - Direct Tax & Litigation • B. Com, FCA, DISA (ICAI)

ASGR and CO, Chartered Accountants (Peer Review Certified: #018Xxx)

Statutory Disclaimer: This publication is compiled by ASGR and CO solely for general informational and educational purposes to assist corporate clients and peers in understanding statutory notifications. It does not constitute legal, tax, or formal secretarial advice. Before acting upon any provisions, specific professional counsel should be sought.

Official Statutory Link