Mangaluru, Oct 9 (KNN) The Kanara Chamber of Commerce and Industry (KCCI) has urged the Finance Ministry to urgently alter its Insolvency and Bankruptcy Code, 2016 so that MSMEs receive preference in the waterfall mechanism of asset distribution, reported The Hindu. 

The Chamber has written to the Union Finance Ministry to treat claims by MSME against Limited Liability Companies on a par with workmen’s dues when National Company Law Tribunal recommends LLCs’ resolution.

In a letter to Union Finance Minister Nirmala Sitharaman Chamber President Ananthesh V. Prabhu said there would be little hope for MSMEs to realise dues after doing business with LLCs that end up before NCLT. 

They lack human resources and infrastructure to conduct customer-credit analysis and would be hit hard when an LLC goes for Resolution by the Tribunal, he pointed out. 

“Resolution Professional or the Committee of Creditors would treat MSMEs as operational creditors thereby offering little leverage to them,” he added. 

The consensus was that MSMEs claim should be treated similarly to the workmen’s dues by being included in Clause (b) of subsection 1 of Section 53. All cases currently pending before the NCLT or NCALT should be eligible for these benefits, said the Chairman. 

He noted that MSMEs caught in the web of companies that have gone to NCLT might not survive if they were not given preference. 

“As a chamber that regularly hosts cases referred for arbitration or settlement pursuant to the MSMED Act of 2006, we can attest to the strain that SMEs are under,” he added. (KNN Bureau)