 bill no 104 of 2021 the insolvency and bankruptcy code (amendment) bill, 2021 a bill further to amend the insolvency and bankruptcy code, 2016be it enacted by parliament in the seventy-second year of the republic of india as follows:—short title and commencement31 of 2016amendment of section 42  in the insolvency and bankruptcy code, 2016 (hereinafter referred to as the principal act), in section 4, after the proviso, the following proviso shall be inserted, namely:—5 "provided further that the central government may, by notification, specify such minimum amount of default of higher value, which shall not be more than one crore rupees, for matters relating to the pre-packaged insolvency resolution process of corporate debtors under chapter iii-a" 3 in section 5 of the principal act,—amendment of section 5(i) after clause (2), the following clause shall be inserted, namely:—10'(2a) "base resolution plan" means a resolution plan provided by the corporate debtor under clause (c) of sub-section (4) of section 54a;';(ii) in clause (5), in sub-clause (b), after the words "corporate insolvency resolution process", the words "or the pre-packaged insolvency resolution process, as the case may be," shall be inserted;15(iii) in clause (11), after the words "corporate insolvency resolution process", the words "or pre-packaged insolvency resolution process, as the case may be" shall be inserted;20(iv) in clause (15), after the words "process period", the words "or by the corporate debtor during the pre-packaged insolvency resolution process period, as the case may be" shall be inserted;(v) in clause (19), after the words "for the purposes of", the words and figures "chapter vi and" shall be inserted;(vi) after clause (23), the following clauses shall be inserted, namely:—25'(23a) "preliminary information memorandum" means a memorandum submitted by the corporate debtor under clause (b) of sub-section (1) of section 54g;(23b) "pre-packaged insolvency commencement date" means the date of admission of an application for initiating the pre-packaged insolvency resolution process by the adjudicating authority under clause (a) of sub-section (4) of section 54c;30(23c) "pre-packaged insolvency resolution process costs" means—(a) the amount of any interim finance and the costs incurred in raising such finance;35(b) the fees payable to any person acting as a resolutionprofessional and any expenses incurred by him for conducting the pre-packaged insolvency resolution process during the pre-packaged insolvency resolution process period, subject to sub-section (6) ofsection 54f;40(c) any costs incurred by the resolution professional in runningthe business of the corporate debtor as a going concern pursuant to an order under sub-section (2) of section 54j;(d) any costs incurred at the expense of the government tofacilitate the pre-packaged insolvency resolution process; and(e) any other costs as may be specified;45(23d) "pre-packaged insolvency resolution process period" means the period beginning from the pre-packaged insolvency commencement date and ending on the date on which an order under sub-section (1) of section 54l, or sub-section (1) of section 54n, or sub-section (2) of section 54-o, as the case may be, is passed by the adjudicating authority;';5(vii) in clause (25), after the words, brackets and figures "of sub-section (2) of section 25", the words, figures and letter "or pursuant to section 54k, as the case may be," shall be inserted;(viii) in clause (27), after the words "corporate insolvency resolution process", the words "or the pre-packaged insolvency resolution process, as the case may be," shall be inserted104 in section 11 of the principal act,—amendment of section 11(i) in clause (a), after the words "corporate insolvency resolution process", the words "or a pre-packaged insolvency resolution process" shall be inserted;(ii) after clause (a), the following clause shall be inserted, namely:—"(aa) a financial creditor or an operational creditor of a corporate debtor undergoing a pre-packaged insolvency resolution process; or";15(iii) after clause (b), the following clause shall be inserted, namely:—"(ba) a corporate debtor in respect of whom a resolution plan has been approved under chapter iii-a, twelve months preceding the date of making of the application; or"205 after section 11 of the principal act, the following section shall be inserted, namely:—insertion of new section 11a25"11a (1) where an application filed under section 54c is pending, the adjudicating authority shall pass an order to admit or reject such application, before considering any application filed under section 7 or section 9 or section 10 during the pendency of such application under section 54c, in respect of the same corporate debtordisposal of applications under section 54c and under section 7 or section 9 or section 1030(2) where an application under section 54c is filed within fourteen days of filing of any application under section 7 or section 9 or section 10, which is pending, in respect of the same corporate debtor, then, notwithstanding anything contained in sections 7, 9 and 10, the adjudicating authority shall first dispose of the application under section 54c(3) where an application under section 54c is filed after fourteen days of the filing of any application under section 7 or section 9 or section 10, in respect of the same corporate debtor, the adjudicating authority shall first dispose of the application under sections 7, 9 or 1035(4) the provisions of this section shall not apply where an application under section 7 or section 9 or section 10 is filed and pending as on the date of the commencement of the insolvency and bankruptcy code (amendment) act, 2021"amendment of section 33406 in section 33 of the principal act, in sub-section (3), after the words "approved by the adjudicating authority", the words, figures, brackets and letter "under section 31 or under sub-section (1) of section 54l," shall be insertedamendment of section 347 in section 34 of the principal act, in sub-section (1), after the words and figures"under chapter ii", the words, figures and letter "or for the pre-packaged insolvency resolution process under chapter iii-a" shall be inserted8 after chapter iii of the principal act, the following chapter shall be inserted, namely:—insertion of new chapter iii-a 'chapter iii-a pre-packaged insolvency resolution process527 of 200654a(1) an application for initiating pre-packaged insolvency resolution process may be made in respect of a corporate debtor classified as a micro, small or medium enterprise under sub-section (1) of section 7 of the micro, small and medium enterprises development act, 2006corporate debtors eligible for pre-packaged insolvency resolution process10(2) without prejudice to sub-section (1), an application for initiating prepackaged insolvency resolution process may be made in respect of a corporate debtor, who commits a default referred to in section 4, subject to the following conditions, that—15(a) it has not undergone pre-packaged insolvency resolution process or completed corporate insolvency resolution process, as the case may be, during the period of three years preceding the initiation date;(b) it is not undergoing a corporate insolvency resolution process; (c) no order requiring it to be liquidated is passed under section 33; (d) it is eligible to submit a resolution plan under section 29a;2025(e) the financial creditors of the corporate debtor, not being its related parties, representing such number and in such manner as may be specified, have proposed the name of the insolvency professional to be appointed as resolution professional for conducting the pre-packaged insolvency resolution process of the corporate debtor, and the financial creditors of the corporate debtor, not being its related parties, representing not less than sixty-six per cent in value of the financial debt due to such creditors, have approved such proposal in such form as may be specified: provided that where a corporate debtor does not have any financial creditors, not being its related parties, the proposal and approval under this clause shall be provided by such persons as may be specified;30(f) the majority of the directors or partners of the corporate debtor, as the case may be, have made a declaration, in such form as may be specified, stating, inter alia, that—35(i) the corporate debtor shall file an application for initiating pre-packaged insolvency resolution process within a definite time period not exceeding ninety days;(ii) the pre-packaged insolvency resolution process is not being initiated to defraud any person; and(iii) the name of the insolvency professional proposed andapproved to be appointed as resolution professional under clause (e);40(g) the members of the corporate debtor have passed a special resolution, or at least three-fourth of the total number of partners, as the case may be, of the corporate debtor have passed a resolution, approving the filing of an application for initiating pre-packaged insolvency resolution process45(3) the corporate debtor shall obtain an approval from its financial creditors, not being its related parties, representing not less than sixty-six per cent in value of the financial debt due to such creditors, for the filing of an application for initiating pre-packaged insolvency resolution process, in such form as may be specified:provided that where a corporate debtor does not have any financial creditors, not being its related parties, the approval under this sub-section shall be provided by such persons as may be specified(4) prior to seeking approval from financial creditors under sub-section (3), the corporate debtor shall provide such financial creditors with—5(a) the declaration referred to in clause (f) of sub-section (2);(b) the special resolution or resolution referred to in clause (g) of sub-section (2);10(c) a base resolution plan which conforms to the requirements referred to in section 54k, and such other conditions as may be specified; and(d) such other information and documents as may be specified54b (1) the insolvency professional, proposed to be appointed as the resolution professional, shall have the following duties commencing from the date of the approval under clause (e) of sub-section (2) of section 54a, namely:—15duties of insolvency professional before initiation of pre-packaged insolvency resolution process(a) prepare a report in such form as may be specified, confirming whether the corporate debtor meets the requirements of section 54a, and the base resolution plan conforms to the requirements referred to in clause (c) of sub-section (4) of section 54a;(b) file such reports and other documents, with the board, as may be specified; and20(c) perform such other duties as may be specified(2) the duties of the insolvency professional under sub-section (1) shall cease, if,—25(a) the corporate debtor fails to file an application for initiating pre-packaged insolvency resolution process within the time period as stated under the declaration referred to in clause (f) of sub-section (2) of section 54a; or(b) the application for initiating pre-packaged insolvency resolution process is admitted or rejected by the adjudicating authority,30as the case may be(3) the fees payable to the insolvency professional in relation to the duties performed under sub-section (1) shall be determined and borne in such manner as may be specified and such fees shall form part of the pre-packaged insolvency resolution process costs, if the application for initiation of pre-packaged insolvency resolution process is admitted3554c (1) where a corporate debtor meets the requirements of section 54a, a corporate applicant thereof may file an application with the adjudicating authority for initiating pre-packaged insolvency resolution processapplication to initiate pre-packaged insolvency resolution process40(2) the application under sub-section (1) shall be filed in such form, containing such particulars, in such manner and accompanied with such fee as may be prescribed(3) the corporate applicant shall, along with the application, furnish—(a) the declaration, special resolution or resolution, as the case may be, and the approval of financial creditors for initiating pre-packaged insolvency resolution process in terms of section 54a;5(b) the name and written consent, in such form as may be specified, of the insolvency professional proposed to be appointed as resolution professional, as approved under clause (e) of sub-section (2) of section 54a, and his report as referred to in clause (a) of sub-section (1) of section 54b;(c) a declaration regarding the existence of any transactions of the corporate debtor that may be within the scope of provisions in respect of avoidance of transactions under chapter iii or fraudulent or wrongful trading under chapter vi, in such form as may be specified;10(d) information relating to books of account of the corporate debtor and such other documents relating to such period as may be specified (4) the adjudicating authority shall, within a period of fourteen days of the receipt of the application, by an order,—(a) admit the application, if it is complete; or15(b) reject the application, if it is incomplete:provided that the adjudicating authority shall, before rejecting an application, give notice to the applicant to rectify the defect in the application within seven days from the date of receipt of such notice from the adjudicating authority20(5) the pre-packaged insolvency resolution process shall commence from the date of admission of the application under clause (a) of sub-section (4)54d (1) the pre-packaged insolvency resolution process shall be completed within a period of one hundred and twenty days from the pre-packaged insolvency commencement date25time-limit for completion of pre-packaged insolvency resolution process(2) without prejudice to sub-section (1), the resolution professional shall submit the resolution plan, as approved by the committee of creditors, to the adjudicating authority under sub-section (4) or sub-section (12), as the case may be, of section 54k, within a period of ninety days from the pre-packaged insolvency commencement date30(3) where no resolution plan is approved by the committee of creditors within the time period referred to in sub-section (2), the resolution professional shall, on the day after the expiry of such time period, file an application with the adjudicating authority for termination of the pre-packaged insolvency resolution process in such form and manner as may be specified3554e (1) the adjudicating authority shall, on the pre-packaged insolvency commencement date, along with the order of admission under section 54c—(a) declare a moratorium for the purposes referred to in sub-section (1)read  with  sub-section  (3)  of  section  14,  which  shall,  mutatis mutandis apply, to the proceedings under this chapter;(b) appoint a resolution professional—40declaration of moratorium and public announcement during prepackaged insolvency resolution process(i) as named in the application, if no disciplinary proceeding is pending against him; or;45(ii) based on the recommendation made by the board, if any disciplinary proceeding is pending against the insolvency professional named in the application; (c) cause a public announcement of the initiation of the pre-packaged insolvency resolution process to be made by the resolution professional, in such form and manner as may be specified, immediately after his appointment(2) the order of moratorium shall have effect from the date of such order till the date on which the pre-packaged insolvency resolution process period comes to an end554f (1) the resolution professional shall conduct the pre-packaged insolvency resolution process of a corporate debtor during the pre-packaged insolvency resolution process period(2) the resolution professional shall perform the following duties, namely:—(a) confirm the list of claims submitted by the corporate debtor undersection 54g, in such manner as may be specified;duties and powers of resolution professional during prepackaged insolvency resolution process10(b) inform creditors regarding their claims as confirmed underclause (a), in such manner as may be specified;(c) maintain an updated list of claims, in such manner as may bespecified;(d) monitor management of the affairs of the corporate debtor;15(e) inform the committee of creditors in the event of breach of any ofthe obligations of the board of directors or partners, as the case may be, of the corporate debtor, under the provisions of this chapter and the rules and regulations made thereunder;(f) constitute the committee of creditors and convene and attend all itsmeetings;20(g) prepare the information memorandum on the basis of thepreliminary information memorandum submitted under section 54g and any other relevant information, in such form and manner as may be specified;25(h) file applications for avoidance of transactions under chapter iii orfraudulent or wrongful trading under chapter vi, if any; and(i) such other duties as may be specified(3) the resolution professional shall exercise the following powers, namely:—(a) access all books of account, records and information availablewith the corporate debtor;30(b) access the electronic records of the corporate debtor from aninformation utility having financial information of the corporate debtor;(c) access the books of account, records and other relevant documentsof the corporate debtor available with government authorities, statutory auditors, accountants and such other persons as may be specified;35(d) attend meetings of members, board of directors and committee ofdirectors, or partners, as the case may be, of the corporate debtor;(e) appoint accountants, legal or other professionals in such manneras may be specified;40(f) collect all information relating to the assets, finances and operationsof the corporate debtor for determining the financial position of the corporate debtor and the existence of any transactions that may be within the scope of provisions relating to avoidance of transactions under chapter iii or fraudulent or wrongful trading under chapter vi, including information relating to—45(i) business operations for the previous two years from the dateof pre-packaged insolvency commencement date;(ii) financial and operational payments for the previous two years from the date of pre-packaged insolvency commencement date;(iii) list of assets and liabilities as on the initiation date; and(iv) such other matters as may be specified;5(g) take such other actions in such manner as may be specified(4) from the date of appointment of the resolution professional, the financial institutions maintaining accounts of the corporate debtor shall furnish all information relating to the corporate debtor available with them to the resolution professional, as and when required by him10 15(5) the personnel of the corporate debtor, its promoters and any other person associated with the management of the corporate debtor shall extend all assistance and cooperation to the resolution professional as may be required by him to perform his duties and exercise his powers, and for such purposes, the provisions of sub-sections (2) and (3) of section 19 shall, mutatis mutandis apply, in relation to the proceedings under this chapter(6) the fees of the resolution professional and any expenses incurred by him for conducting the pre-packaged insolvency resolution process shall be determined in such manner as may be specified:20provided that the committee of creditors may impose limits and conditions on such fees and expenses:provided further that the fees and expenses for the period prior to the constitution of the committee of creditors shall be subject to ratification by it(7) the fees and expenses referred to in sub-section (6) shall be borne in such manner as may be specified2554g (1) the corporate debtor shall, within two days of the pre-packaged insolvency commencement date, submit to the resolution professional the following information, updated as on that date, in such form and manner as may be specified, namely:—list of claims and preliminary information memorandum30(a) a list of claims, along with details of the respective creditors, their security interests and guarantees, if any; and(b) a preliminary information memorandum containing information relevant for formulating a resolution plan35(2) where any person has sustained any loss or damage as a consequence of the omission of any material information or inclusion of any misleading information in the list of claims or the preliminary information memorandum submitted by the corporate debtor, every person who—(a) is a promoter or director or partner of the corporate debtor, as the case may be, at the time of submission of the list of claims or the preliminary information memorandum by the corporate debtor; or40(b) has authorised the submission of the list of claims or the preliminary information memorandum by the corporate debtor, shall, without prejudice to section 77a, be liable to pay compensation to every person who has sustained such loss or damage45(3) no person shall be liable under sub-section (2), if the list of claims or the preliminary information memorandum was submitted by the corporate debtor without his knowledge or consent(4) subject to section 54e, any person, who sustained any loss or damage as a consequence of omission of material information or inclusion of any misleading information in the list of claims or the preliminary information memorandum shall be entitled to move a court having jurisdiction for seeking compensation for such loss or damage554h during the pre-packaged insolvency resolution process period,—management of affairs of corporate debtor(a) the management of the affairs of the corporate debtor shall continue to vest in the board of directors or the partners, as the case may be, of the corporate debtor, subject to such conditions as may be specified;10(b) the board of directors or the partners, as the case may be, of the corporate debtor, shall make every endeavour to protect and preserve the value of the property of the corporate debtor, and manage its operations as a going concern; and15(c) the promoters, members, personnel and partners, as the case may be, of the corporate debtor, shall exercise and discharge their contractual or statutory rights and obligations in relation to the corporate debtor, subject to the provisions of this chapter and such other conditions and restrictions as may be prescribedcommittee of creditors2054-i (1) the resolution professional shall, within seven days of the pre-packaged insolvency commencement date, constitute a committee of creditors, based on the list of claims confirmed under clause (a) of sub-section (2) of section 54f:25provided that the composition of the committee of creditors shall be altered on the basis of the updated list of claims, in such manner as may be specified, and any such alteration shall not affect the validity of any past decision of the committee of creditors(2) the first meeting of the committee of creditors shall be held within seven days of the constitution of the committee of creditors(3) the provisions of section 21, except sub-section (1) thereof, shall, mutatis mutandis apply, in relation to the committee of creditors under this chapter:30 provided that for the purposes of this sub-section, references to "resolution professional" under sub-sections (9) and (10) of section 21, shall be construed as references to "corporate debtor or the resolution professional"35vesting management of corporate debtor with resolution professional54j (1) where the committee of creditors, at any time during the pre-packaged insolvency resolution process period, by a vote of not less than sixty-six per cent of the voting shares, resolves to vest the management of the corporate debtor with the resolution professional, the resolution professional shall make an application for this purpose to the adjudicating authority, in such form and manner as may be specified40(2) on an application made under sub-section (1), if the adjudicating authority is of the opinion that during the pre-packaged insolvency resolution process—(a) the affairs of the corporate debtor have been conducted in a fraudulent manner; or45(b) there has been gross mismanagement of the affairs of the corporatedebtor,it shall pass an order vesting the management of the corporate debtor with the resolution professional(3) notwithstanding anything to the contrary contained in this chapter, the provisions of—(a) sub-sections (2) and (2a) of section 14; (b) section 17;5(c) clauses (e) to (g) of section 18;(d) sections 19 and 20; (e) sub-section (1) of section 25;(f) clauses (a) to (c) and clause (k) of sub-section (2) of section 25; and(g) section 28,10shall, mutatis mutandis apply, to the proceedings under this chapter, from the date of the order under sub-section (2), until the pre-packaged insolvency resolution process period comes to an end1554k (1) the corporate debtor shall submit the base resolution plan, referred to in clause (c) of sub-section (4) of section 54a, to the resolution professional within two days of the pre-packaged insolvency commencement date, and the resolution professional shall present it to the committee of creditors20(2) the committee of creditors may provide the corporate debtor an opportunity to revise the base resolution plan prior to its approval under sub-section (4) or invitation of prospective resolution applicants under sub-section (5), as the case may be(3) the resolution plans and the base resolution plan, submitted under this section shall conform to the requirements referred to in sub-sections (1) and (2) of section 30, and the provisions of sub-sections (1), (2) and (5) of section 30 shall, mutatis mutandis apply, to the proceedings under this chapter25(4) the committee of creditors may approve the base resolution plan for submission to the adjudicating authority if it does not impair any claims owed by the corporate debtor to the operational creditors(5) where—(a) the committee of creditors does not approve the base resolution plan under sub-section (4); or30(b) the base resolution plan impairs any claims owed by the corporate debtor to the operational creditors, the resolution professional shall invite prospective resolution applicants to submit a resolution plan or plans, to compete with the base resolution plan, in such manner as may be specified3540(6) the resolution applicants submitting resolution plans pursuant to invitation under sub-section (5), shall fulfil such criteria as may be laid down by the resolution professional with the approval of the committee of creditors, having regard to the complexity and scale of operations of the business of the corporate debtor and such other conditions as may be specified(7) the resolution professional shall provide to the resolution applicants,—(a) the basis for evaluation of resolution plans for the purposes of sub-section (9), as approved by the committee of creditors subject to such conditions as may be specified; and(b) the relevant information referred to in section 29, which shall, mutatis mutandis apply, to the proceedings under this chapter, in such manner as may be specified5(8) the resolution professional shall present to the committee of creditors, for its evaluation, resolution plans which conform to the requirements referred to in sub-section (2) of section 30(9) the committee of creditors shall evaluate the resolution plans presented by the resolution professional and select a resolution plan from amongst them10(10) where, on the basis of such criteria as may be laid down by it, the committee of creditors decides that the resolution plan selected under sub-section (9) is significantly better than the base resolution plan, such resolution plan may be selected for approval under sub-section (12): provided that the criteria laid down by the committee of creditors under this sub-section shall be subject to such conditions as may be specified15(11) where the resolution plan selected under sub-section (9) is not considered for approval or does not fulfil the requirements of sub-section (10), it shall compete with the base resolution plan, in such manner and subject to such conditions as may be specified, and one of them shall be selected for approval under sub-section (12)20(12) the resolution plan selected for approval under sub-section (10) or sub-section (11), as the case may be, may be approved by the committee of creditors for submission to the adjudicating authority:25provided that where the resolution plan selected for approval under sub-section (11) is not approved by the committee of creditors, the resolution professional shall file an application for termination of the pre-packaged insolvency resolution process in such form and manner as may be specified30(13) the approval of the resolution plan under sub-section (4) or sub-section (12), as the case may be, by the committee of creditors, shall be by a vote of not less than sixty-six per cent of the voting shares, after considering its feasibility and viability, the manner of distribution proposed, taking into account the order of priority amongst creditors as laid down in sub-section (1) of section 53, including the priority and value of the security interest of a secured creditor and such other requirements as may be specified35(14) while considering the feasibility and viability of a resolution plan, where the resolution plan submitted by the corporate debtor provides for impairment of any claims owed by the corporate debtor, the committee of creditors may require the promoters of the corporate debtor to dilute their shareholding or voting or control rights in the corporate debtor:40 provided that where the resolution plan does not provide for such dilution, the committee of creditors shall, prior to the approval of such resolution plan under sub-section (4) or sub-section (12), as the case may be, record reasons for its approval45(15) the resolution professional shall submit the resolution plan as approved by the committee of creditors under sub-section (4) or sub-section (12), as the case may be, to the adjudicating authorityexplanation i—for the removal of doubts, it is hereby clarified that, the corporate debtor being a resolution applicant under clause (25) of section 5, may submit the base resolution plan either individually or jointly with any other personexplanation ii—for the purposes of sub-sections (4) and (14), claims shall be considered to be impaired where the resolution plan does not provide for the full payment of the confirmed claims as per the updated list of claims maintained by the resolution professional5approval of resolution plan1054l (1) if the adjudicating authority is satisfied that the resolution plan as approved by the committee of creditors under sub-section (4) or sub-section (12), as the case may be of section 54k, subject to the conditions provided therein, meets the requirements as referred to in sub-section (2) of section 30, it shall, within thirty days of the receipt of such resolution plan, by order, approve the resolution plan: provided that the adjudicating authority shall, before passing an order for approval of a resolution plan under this sub-section, satisfy itself that the resolution plan has provisions for its effective implementation15(2) the order of approval under sub-section (1) shall have such effect as provided under sub-sections (1), (3) and (4) of section 31, which shall, mutatis mutandis apply, to the proceedings under this chapter20(3) where the adjudicating authority is satisfied that the resolution plan does not conform to the requirements referred to in sub-section (1), it may, within thirty days of the receipt of such resolution plan, by an order, reject the resolution plan and pass an order under section 54n25(4) notwithstanding anything to the contrary contained in this section, where the adjudicating authority has passed an order under sub-section (2) of section 54j and the resolution plan approved by the committee of creditors under sub-section (4) or sub-section (12), as the case may be of section 54k, does not result in the change in the management or control of the corporate debtor to a person who was not a promoter or in the management or control of the corporate debtor, the adjudicating authority shall pass an order—(a) rejecting such resolution plan;30(b) terminating the pre-packaged insolvency resolution process and passing a liquidation order in respect of the corporate debtor as referred to in sub-clauses (i), (ii) and (iii) of clause (b) of sub-section (1) of section 33; and(c) declaring that the pre-packaged insolvency resolution process costs, if any, shall be included as part of the liquidation costs for the purposes of liquidation of the corporate debtor35appeal against order under section 54l54m any appeal against an order approving the resolution plan under sub-section (1) of section 54l, shall be on the grounds laid down in sub-section (3) of section 614054n (1) where the resolution professional files an application with the adjudicating authority,—(a) under the proviso to sub-section (12) of section 54k; or termination of prepackaged insolvency resolution process(b) under sub-section (3) of section 54d, the adjudicating authority shall, within thirty days of the date of such application, by an order, —(i) terminate the pre-packaged insolvency resolution process; and45(ii) provide for the manner of continuation of proceedings initiatedfor avoidance of transactions under chapter iii or proceedings initiated under section 66 and section 67a, if any5(2) where the resolution professional, at any time after the pre-packaged insolvency commencement date, but before the approval of resolution plan under sub-section (4) or sub-section (12), as the case may be of section 54k, intimates the adjudicating authority of the decision of the committee of creditors, approved by a vote of not less than sixty-six per cent of the voting shares, to terminate the pre-packaged insolvency resolution process, the adjudicating authority shall pass an order under sub-section (1)10(3) where the adjudicating authority passes an order under sub-section (1), the corporate debtor shall bear the pre-packaged insolvency resolution process costs, if any15(4) notwithstanding anything to the contrary contained in this section, where the adjudicating authority has passed an order under sub-section (2) of section 54j and the pre-packaged insolvency resolution process is required to be terminated under sub-section (1), the adjudicating authority shall pass an order—20(a) of liquidation in respect of the corporate debtor as referred to in sub-clauses (i), (ii) and (iii) of clause (b) of sub-section (1) of section 33;and(b) declare that the pre-packaged insolvency resolution process costs, if any, shall be included as part of the liquidation costs for the purposes of liquidation of the corporate debtor25initiation of corporate insolvency resolution process3054-o(1) the committee of creditors, at any time after the pre-packaged insolvency commencement date but before the approval of resolution plan under sub-section (4) or sub-section (12), as the case may be of section 54k, by a vote of not less than sixty-six per cent of the voting shares, may resolve to initiate a corporate insolvency resolution process in respect of the corporate debtor, if such corporate debtor is eligible for corporate insolvency resolution process under chapter ii(2) notwithstanding anything to the contrary contained in chapter ii, where the resolution professional intimates the adjudicating authority of the decision of the committee of creditors under sub-section (1), the adjudicating authority shall, within thirty days of the date of such intimation, pass an order to —35(a) terminate the pre-packaged insolvency resolution process andinitiate corporate insolvency resolution process under chapter ii in respect of the corporate debtor;40(b) appoint the resolution professional referred to in clause (b) ofsub-section (1) of section 54e as the interim resolution professional, subject to submission of written consent by such resolution professional to the adjudicating authority in such form as may be specified; and45(c) declare that the pre-packaged insolvency resolution process costs,if any, shall be included as part of insolvency resolution process costs for the purposes of the corporate insolvency resolution process of the corporate debtor(3) where the resolution professional fails to submit written consent under clause (b) of sub-section (2), the adjudicating authority shall appoint an interim resolution professional by making a reference to the board for recommendation, in the manner as provided under section 16(4) where  the  adjudicating  authority  passes  an  order  under sub-section (2)—(a) such order shall be deemed to be an order of admission of an application under section 7 and shall have the same effect;5(b) the corporate insolvency resolution process shall commence from the date of such order;(c) the proceedings initiated for avoidance of transactions under chapter iii or proceedings initiated under section 66 and section 67a, if any, shall continue during the corporate insolvency resolution process;10(d) for the purposes of sections 43, 46 and 50, references to "insolvency commencement date" shall mean "pre-packaged insolvency commencement date"; and15(e) in computing the relevant time or the period for avoidable transactions, the time-period for the duration of the pre-packaged insolvency resolution process shall also be included, notwithstanding anything to the contrary contained in sections 43, 46 and 502054p (1) save as provided under this chapter, the provisions of sections 24,25a, 26, 27, 28, 29a, 32a, 43 to 51, and the provisions of chapters vi and vii of this part shall, mutatis mutandis apply, to the pre-packaged insolvency resolution process, subject to the following, namely:—application of provisions of chapters ii, iii, vi and vii to this chapter25(a) reference to "members of the suspended board of directors or the partners" under clause (b) of sub-section (3) of section 24 shall be construed as reference to "members of the board of directors or the partners, unless an order has been passed by the adjudicating authority under section 54j";(b) reference to "clause (j) of sub-section (2) of section 25" under section 26 shall be construed as reference to "clause (h) of sub-section (2)of section 54f";30(c) reference to "section 16" under section 27 shall be construed as reference to "section 54e";(d) reference to "resolution professional" in sub-sections (1) and (4)of section 28 shall be construed as "corporate debtor";(e) reference to "section 31" under sub-section (3) of section 61 shall be construed as reference to "sub-section (1) of section 54l";35(f) reference to "section 14" in sub-sections (1) and (2) of section 74shall be construed as reference to "clause (a) of sub-section (1) of section 54e";(g) reference to "section 31" in sub-section (3) of section 74 shall be construed as reference to "sub-section (1) of section 54l"40(2) without prejudice to the provisions of this chapter and unless the context otherwise requires, where the provisions of chapters ii, iii, vi and vii are applied to the proceedings under this chapter, references to—(a) "insolvency commencement date" shall be construed as references to "pre-packaged insolvency commencement date";45(b) "resolution professional" or "interim resolution professional", as the case may be, shall be construed as references to the resolution professional appointed under this chapter;(c) "corporate insolvency resolution process" shall be construed as references to "pre-packaged insolvency resolution process"; and(d) "insolvency resolution process period" shall be construed as references to "pre-packaged insolvency resolution process period"'amendment of section 619 in section 61 of the principal act, for sub-section (4), the following sub-sections shall be substituted, namely:—5"(4) an appeal against a liquidation order passed under section 33, orsub-section (4) of section 54l, or sub-section (4) of section 54n, may be filed ongrounds of material irregularity or fraud committed in relation to such a liquidation order10(5) an appeal against an order for initiation of corporate insolvencyresolution process passed under sub-section (2) of section 54-o, may be filed on grounds of material irregularity or fraud committed in relation to such an order" amendment of section 6510 in section 65 of the principal act, after sub-section (2), the following sub-section shall be inserted, namely:—"(3) if any person initiates the pre-packaged insolvency resolution process—15(a) fraudulently or with malicious intent for any purpose other thanfor the resolution of insolvency; or(b) with the intent to defraud any person,the adjudicating authority may impose upon such person a penalty which shall not be less than one lakh rupees, but may extend to one crore rupees"2011 after section 67 of the principal act, the following section shall be inserted, namely:—insertion of new section 67a25"67a on and after the pre-packaged insolvency commencement date, where an officer of the corporate debtor manages its affairs with the intent to defraud creditors of the corporate debtor or for any fraudulent purpose, the adjudicating authority may, on an application by the resolution professional, pass an order imposing upon any such officer, a penalty which shall not be less than one lakh rupees, but may extend to one crore rupees"fraudulent management of corporate debtor during pre-packaged insolvency resolution process12 in section 77 of the principal act, the explanation shall be omittedomission of explanation to section 773013 after section 77 of the principal act, the following section shall be inserted, namely:—insertion of new section 77a"77a (1) where—(a) a corporate debtor provides any information in the application under section 54c which is false in material particulars, knowing it to be false or omits any material fact, knowing it to be material; orpunishment for offences related to prepackaged insolvency resolution process35(b) a corporate debtor provides any information in the list ofclaims or the preliminary information memorandum submitted under sub-section (1) of section 54g which is false in material particulars,knowing it to be false or omits any material fact, knowing it to be material; or40(c) any person who knowingly and wilfully authorised orpermitted the furnishing of such information under sub-clauses (a)and (b),such corporate debtor or person, as the case may be, shall be punishable with imprisonment for a term which shall not be less than three years, but which may extend to five years or with fine which shall not be less than one lakh rupees, but which may extend to one crore rupees, or with both5(2) if a director or partner of the corporate debtor, as the case may be, deliberately contravenes the provisions of chapter iii-a, such person shall be punishable with imprisonment for not less than three years, but which may extend to five years, or with fine which shall not be less than one lakh rupees, but which may extend to one crore rupees, or with both10explanation—for the purposes of this section and sections 75, 76 and 77, an application shall be deemed to be false in material particulars in case the facts mentioned or omitted in the application, if true, or not omitted from the application, as the case may be, would have been sufficient to determine the existence of a default under this code" 14 in section 208 of the principal act,—amendment of section 208(i) after clause (c), the following clause shall be inserted, namely:—15"(ca) pre-packaged insolvency resolution process under chapter iii-aof part ii;"; (ii) after sub-section (1), the following sub-section shall be inserted, namely:—20"(1a) where the name of the insolvency professional proposed to be appointed as a resolution professional, is approved under clause (e) of sub-section (2) of section 54a, it shall be the function of such insolvency professional to take such actions as may be necessary to perform his functions and duties prior to the initiation of the pre-packaged insolvency resolution process under chapter iii-a of part ii"2515 in section 239 of the principal act, in sub-section (2), after clause (fc), the following clauses shall be inserted, namely:—amendment of section 239"(fd) the form, particulars, manner and fee for making application before the adjudicating authority under sub-section (2) of section 54c;30(fe) the conditions and restrictions with which the promoters, members, personnel and partners of the corporate debtor shall exercise and discharge contractual or statutory rights and obligations under clause (c) of section 54h;" 16 in section 240 of the principal act, in sub-section (2),—amendment of section 240(i) after clause (e), the following clause shall be inserted, namely:—35"(ea) the other costs under sub-clause (e) of clause (23c) of section 5;"; (ii) after clause (zk), the following clauses shall be inserted, namely:—40"(zka) such number of financial creditors and the manner of proposing the insolvency professional, and the form for approving such insolvency professional by the financial creditors under clause (e), the persons who shall provide approval under the proviso to clause (e), the form for making a declaration under clause (f) of sub-section (2) of section 54a;(zkb) the form for obtaining approval from financial creditors under sub-section (3), and the persons who shall provide approval under the proviso to sub-section (3) of section 54a;45(zkc) the other conditions for the base resolution plan under clause (c), and such information and documents under clause (d) of sub-section (4) of section 54a;(zkd) the form in which the report is to be prepared under clause (a), such reports and other documents under clause (b), and such other duties under clause (c) of sub-section (1), and the manner of determining and bearing the fees in sub-section (3) of section 54b;5(zke) the form for providing written consent of the insolvencyprofessional under clause (b), the form for declaration under clause (c), the information relating to books of account and such other documents relating to such period under clause (d) of sub-section (3) of section 54c;10(zkf) the form and manner for making application for termination ofthe pre-packaged insolvency resolution process under sub-section (3) of section 54d;(zkg) the form and manner of making public announcement underclause (c) of sub-section (1) of section 54e;15(zkh) the manner of confirming the list of claims under clause (a), themanner of informing creditors under clause (b), the manner of maintaining an updated list of claims under clause (c), the form and manner of preparing the information memorandum under clause (g), and such other duties underclause (i) of sub-section (2) of section 54f;20(zki) such other persons under clause (c), the manner of appointingaccountants, legal or other professionals under clause (e), such other mattersunder sub-clause (iv) of clause (f) and the manner of taking other actionsunder clause (g) of sub-section (3) of section 54f;25(zkj) the manner of determination of fees and expenses asmay be incurred by the resolution professional under sub-section (6) of section 54f;(zkk) the manner of bearing fees and expenses under sub-section (7)of section 54f;(zkl) the form and manner of list of claims and preliminary informationmemorandum under sub-section (1) of section 54g;(zkm) the conditions under clause (a) of section 54h;30(zkn) the manner of alteration of the composition of the committee ofcreditors under the proviso to sub-section (1) of section 54-i;(zko) the form and manner of making application under sub-section (1)of section 54j;35(zkp) the manner of inviting prospective resolution applicants undersub-section (5) of section 54k;(zkq) the other conditions under sub-section (6) of section 54k;(zkr) the conditions under clause (a) and the manner of providing thebasis for evaluation of resolution plans and the information referred to in section 29 under sub-section (7) of section 54k;40(zks) the  conditions  under  the  proviso  to  sub-section  (10)  ofsection 54k;(zkt) the  manner  and  conditions  under  sub-section  (11)  ofsection 54k;45(zku) the form and manner of filing application under the proviso tosub-section (12) of section 54k;(zkv) the other requirements under sub-section (13) of section 54k;(zkw) the form for submission of written consent under clause (b) of sub-section (2) of section 54-o;"5amendment of section 240a17 in section 240a of the principal act, in sub-section (1), after the words"corporate insolvency resolution process", the words "or pre-packaged insolvency resolution process" shall be insertedrepeal and savingsord 3 of 202118 (1) the insolvency and bankruptcy code (amendment) ordinance, 2021 ishereby repealed10(2) notwithstanding such repeal, anything done or any action taken under the said ordinance shall be deemed to have been done or taken under the provisions of this act statement of objects and reasonsthe insolvency and bankruptcy code, 2016, was enacted to consolidate and amend the laws relating to reorganisation and insolvency resolution of corporate persons, partnership firms, individuals and to achieve the desired objectives under it the code was amended in the past to deal with the emerging market realities and to achieve certainty to the various processes under the law2  covid-19 pandemic has impacted businesses, financial markets and economies all over the world, including india the government has been taking several measures to mitigate the distress caused by the pandemic, inter alia, increasing the minimum amount of default to one crore rupees for initiation of corporate insolvency resolution process and suspension of filing of corporate insolvency resolution applications in respect of the defaults arising during the period of one year between 25th march, 2020 and 24th march, 2021 the micro, small and medium enterprises sector is critical to the economy considering their significant contribution to our gross domestic product and generation of employment to a sizeable population it has, therefore, been considered necessary to urgently address the specific requirements of the sector by providing an efficient and alternative framework under the code for quicker, cost-effective insolvency resolution process that is least disruptive to the businesses, ensuring, among other objectives, job preservation 3 in the aforesaid circumstances, it has become necessary to amend the code to provide for pre-packaged insolvency resolution process  however, as the parliament was not in session and immediate action was required to be taken, the insolvency and bankruptcy code (amendment) ordinance, 2021, was promulgated by the president on the 4th day of april, 2021 4 the insolvency and bankruptcy code (amendment) bill, 2021, that seeks to replace the ordinance, inter alia, provides for— (a) specifying a minimum threshold of not more than one crore rupees for initiating pre-packaged insolvency resolution process;(b) disposal of simultaneous applications for initiation of corporate insolvency resolution process and pre-packaged insolvency resolution process, pending against the same corporate debtor;(c) inserting a new chapter iii-a containing sections 54a to 54p to facilitate pre-packaged insolvency resolution process for corporate persons that are micro, small and medium enterprises;(d) penalty for fraudulent or malicious initiation of pre-packaged insolvency resolution process or with intent to defraud persons;(e) penalty for fraudulent management of corporate debtor during pre-packaged insolvency resolution process;(f) punishment for offences related to pre-packaged insolvency resolution process; and(g) certain amendments to the relevant provisions, which are consequential in nature 5 the bill seeks to achieve the above objectivesthe 19th july, 2021 memorandum  regarding  delegated  legislationclause 15 of the bill empowers the central government to make rules in respect of the following matters, namely:—(a) the form, particulars, manner and fee for making application before the adjudicating authority under sub-section (2) of section 54c;(b) the conditions and restrictions with which the promoters, members, personnel and partners of the corporate debtor shall exercise and discharge contractual or statutory rights and obligations under clause (c) of section 54h clause 16 of the bill confers power upon the insolvency and bankruptcy board of india to make regulations in respect of the following matters, namely:—(a) the other costs under sub-clause (e) of clause (23c) of section 5;(b) such number of financial creditors and the manner of proposing the insolvency professional, and the form for approving such insolvency professional by the financial creditors under clause (e), the persons who shall provide approval under the proviso to clause (e), the form for making a declaration under clause (f)of sub-section (2) of section 54a;(c) the  form  for  obtaining  approval  from  financial  creditors  under sub-section (3), and the persons who shall provide approval under the proviso to sub-section (3) of section 54a;(d) the other conditions for the base resolution plan under clause (c), and such information and documents under clause (d) of sub-section (4) of section 54a;(e) the form in which the report is to be prepared under clause (a), such reports and other documents under clause (b), and such other duties under clause (c) of sub-section (1), and the manner of determining the fees under sub-section (3) of section 54b;(f) the form for providing written consent of the insolvency professional under clause (b), the form for declaration under clause (c), the information relating to books of account and such other documents relating to such period under clause (d) of sub-section (3) of section 54c;(g) the form and manner for making application for termination of the pre-packaged insolvency resolution process under sub-section (3) of section 54d;(h) the form and manner of making public announcement under clause (c) of sub-section (1) of section 54e;(i) the manner of confirming the list of claims under clause (a), the manner of informing creditors under clause (b), the manner of maintaining an updated list of claims under clause (c), the form and manner of preparing the information memorandum under clause (g), and such other duties under clause (i) of sub-section (2) of section 54f;(j) such other persons under clause (c), the manner of appointing accountants, legal or other professionals under clause (e), such other matters under sub-clause (iv) of clause (f) and the manner of taking other actions under clause (g) of sub-section (3) of section 54f;(k) the manner of determination of fees and expenses as may be incurred by the resolution professional under sub-section (6) of section 54f;(l) manner of bearing fees and expenses under sub-section (7) of section 54f;(m) the form and manner of list of claims and preliminary information memorandum under sub-section (1) of section 54g;(n) the conditions under clause (a) of section 54h;(o) the manner of alteration of the composition of the committee of creditors under the proviso to sub-section (1) of section 54-i;(p) the form and manner of making application under sub-section (1) of section 54j;(q) the manner of inviting prospective resolution applicants under sub-section (5) of section 54k;(r) other conditions under sub-section (6) of section 54k;(s) the conditions under clause (a) and the manner of providing the basis for evaluation of resolution plans and the information referred to in section 29 under sub-section (7) of section 54k;(t) the conditions under the proviso to sub-section (10) of section 54k;(u) the manner and conditions under sub-section (11) of section 54k;(v) the form and manner of filing application under the proviso to sub-section (12) of section 54k;(w) other requirements under sub-section (13) of section 54k; and(x) the form for submission of written consent under clause (b) of sub-section (2) of section 54-o 2 the matters in respect of which the rules and regulations may be made are matters of procedure and administrative detail, and as such, it is not practical to provide for them in the proposed bill itself the delegation of legislative power is, therefore, of a normal character annexureextracts from the insolvency and bankruptcy code, 2016(31 of 2016)     part ii insolvency resolution and liquidation for corporate persons chapter i preliminaryapplication of this part4 this part shall apply to matters relating to the insolvency and liquidation of corporate debtors where the minimum amount of the default is one crore rupees: provided that the central government may, by notification, specify the minimum amount of default of higher value which shall not be more than one crore rupees5 in this part, unless the context otherwise requires,—definitions    (5) "corporate applicant" means—    (b) a member or partner of the corporate debtor who is authorised to make an application for the corporate insolvency resolution process under the constitutional document of the corporate debtor; or    (11) "initiation date" means the date on which a financial creditor, corporate applicant or operational creditor, as the case may be, makes an application to the adjudicating authority for initiating corporate insolvency resolution process;    (15) "interim finance" means any financial debt raised by the resolution professional during the insolvency resolution process period and such other debt as may be notified;    18 of 2013 6 of 2009(19) "officer" for the purposes of chapter vii of this part, means an officer who is in default, as defined in clause (60) of section 2 of the companies act, 2013 or a designated partner as defined in clause (j) of section 2 of the limited liability partnership act, 2008, as the case may be;    (25) "resolution applicant" means a person, who individually or jointly with any other person, submits a resolution plan to the resolution professional pursuant to the invitation made under clause (h) of sub-section (2) of section 25;    (27) "resolution professional", for the purposes of this part, means an insolvency professional appointed to conduct the corporate insolvency resolution process and includes an interim resolution professional; and    11 the following persons shall not be entitled to make an application to initiate corporate insolvency resolution process under this chapter, namely:—persons not entitled to make application(a) a corporate debtor undergoing a corporate insolvency resolution process; or     chapter iii liquidation process33 (1)    initiation of liquidation(3) where the resolution plan approved by the adjudicating authority is contravened by the concerned corporate debtor, any person other than the corporate debtor, whose interests are prejudicially affected by such contravention, may make an application to the adjudicating authority for a liquidation order as referred to in sub-clauses (i), (ii) and (iii) of clause (b) of sub-section (1)    appointment of liquidator and fee to be paid34 (1) where the adjudicating authority passes an order for liquidation of the corporate debtor under section 33, the resolution professional appointed for the corporate insolvency resolution process under chapter ii shall, subject to submission of a written consent by the resolution professional to the adjudicatory authority in specified form, shall act as the liquidator for the purposes of liquidation unless replaced by the adjudicating authority under sub-section (4)    61 (1)     appeals and appellate authority(4) an appeal against a liquidation order passed under section 33 may be filed on grounds of material irregularity or fraud committed in relation to such a liquidation order     77 where—(a) a corporate debtor provides information in the application under section 10which is false in material particulars, knowing it to be false and omits any material fact, knowing it to be material; orpunishment for providing false information in application made by corporate debtor(b) any person who knowingly and wilfully authorised or permitted the furnishing of such information under sub-clause (a), such corporate debtor or person, as the case may be, shall be punishable with imprisonment for a term which shall not be less than three years, but which may extend to five years or with fine which shall not be less than one lakh rupees, but which may extend to one crore rupees, or with bothexplanation—for the purposes of this section and sections 75 and 76, an application shall be deemed to be false in material particulars in case the facts mentioned or omitted in the application, if true, or not omitted from the application as the case may be, would have been sufficient to determine the existence of a default under this code     240a(1) notwithstanding anything to the contrary contained in this code, the provisions of clauses (c) and (h) of section 29a shall not apply to the resolution applicant in respect of corporate insolvency resolution process of any micro, small and medium enterprises     application of this code to micro, small and medium enterprises———— a bill further to amend the insolvency and bankruptcy code, 2016————(smt nirmala sitharaman, minister of finance and corporate affairs)mgipmrnd—381ls—20-07-2021