ENA MSME 2020-07-02 06:13:41 <p><strong>New Delhi, Jul 2 (KNN)</strong> The Micro Small and Medium Enterprises (MSMEs) hit by Covid pandemic may have something to cheer at last.</p> <p>Insolvency and Bankruptcy Board of India (IBBI) has formulated a Special Resolution Process (SRP) for MSMEs who find their financial position unmanageable due to Covid crisis.</p> <p>While presenting the Atma Nirbhar Bharat package Finance Minister had announced to come out with a Special insolvency resolution framework for MSMEs under section 240A of the Insolvency and Bankruptcy Code.</p> <p>According to sources close to the development, the scheme would be available to corporate MSMEs, that is, units incorporated as Companies or LLP.</p> <p>The salient features of the scheme are proposed to be:</p> <p> --- If an MSME finds it unable to meet its financial obligations, the insolvency resolution process could be initiated on the occurrence of default of at least Rs.1 lakh</p> <p> --- It can be triggered by the MSME promoter/ owner only (not by the Financial or other creditors)</p> <p> --- During the process of resolution, the MSME owner remains in control and keeps running the unit but all legal proceedings to take control of assets by creditors are stopped.</p> <p> --- It provides first right of offer to promoters of the MSME to submit resolution plans</p> <p> --- It proposes a simplified claim verification process and preparation of information memorandum</p> <p> --- It expands the scope of interim finance to facilitate rescue financing of the CD during COVID-19 with the approval of 3/4th financial creditors in value.</p> <p>Federation of Indian Micro and Small &amp; Medium Enterprises (FISME) which facilitated a consultation round of MSME associations with IBBI shared that most participants found the scheme potentially useful.</p> <p>According to Lucknow based V K Agarwal Managing Director of Shashi Cables Ltd and former FISME President, the scheme seemed to be modelled on insolvency provisions under US chapter-11, was very promising indeed but some way needed to be found to make financial creditors to come on board and cooperate.</p> <p>The scheme envisages appointment of an Insolvency Professional (IP) as Resolution Professional to conduct the process, with the consent of the unrelated financial creditors having at least 25% of the outstanding financial claims.</p> <p>The scheme is under final stages of approval and is expected to be announced soon.</p> <p><iframe frameborder="0" height="500" id="mgiframe" src="//mg.mgid.com/mghtml/framehtml/c/k/n/knnindia.co.in.338951.html" width="100%"></iframe></p> 25362 https://knnindia.co.in/news/newsdetails/msme/govt-mulls-simplified-insolvency-scheme-for-covid-hit-msmes 2020-07-02 06:13:41 knnindia.co.in