The Insolvency and Bankruptcy Code (Amendment) Ordinance, 2021, was promulgated by President Ram Nath Kovind on 4 April to offer an alternate bankruptcy resolution scheme for small businesses. On the same day, Kovind also signed off on the Tribunals Reforms (Rationalisation and Conditions of Service) Ordinance, 2021.
The ordinance on the pre-packaged bankruptcy resolution scheme was issued as the government was keen to offer a special simplified window to small businesses for exploring chances of a turnaround. The minimum payment default threshold to avail of this scheme is ₹10 lakh. This scheme takes into account the special circumstances in which micro, small and medium enterprises function.
The ordinance on tribunal reforms was issued as the government wanted to streamline tribunals on priority, save considerable costs involved in running them and get speedy justice delivery. According to a government analysis, tribunals have not necessarily led to faster justice delivery in the last three years. The government believes many tribunals only add to another additional layer of litigation.
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