India’s updated insolvency framework introduces a pre-pack resolution mechanism that allows faster debt restructuring while keeping promoters in control, according to experts.Dinesh Khara, Former Chairman, SBI, said the framework can reduce delays at tribunals. “Many of the cases actually will fall in the purview of this kind of a resolution mechanism… it will ease the burden for the National Company Law Tribunal (NCLT),” he noted.
The amendment also sets timelines and introduces safeguards. If lenders are not satisfied with promoter conduct, cases can shift to the standard insolvency route.
For the full interview, watch the accompanying videoBahram Vakil, Founding Partner of AZB & Partners, said the new process focuses on speed and early intervention. “You have to reach an agreement with the financial creditors before… and then pass it through the court system… in a matter of a few weeks,” he said, explaining the pre-pack model.The change allows stressed companies to resolve issues before entering lengthy insolvency proceedings. Vakil added that the approach works when lenders are willing to back existing promoters. “Wherever the banks are comfortable… this will be a very useful tool,” he said.Also Read | RBI policy seen as dovish, but experts warn hikes may return if oil and rupee risks worsenExperts said the changes come at a time when businesses may face stress due to supply chain disruptions and global factors. The framework is expected to help preserve asset value and improve recovery outcomes.Catch all the latest updates from the stock market here
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