Insolvency Law

[By Gourav Kathuria & Awantika Yash]  The authors are students at NALSAR University of Law, Hyderabad.  Recently, the National Company Law Appellate Tribunal (“NCLAT”) in Technology Development Board v. Anil Goel & Ors. held that there can be no inter se priority among the secured creditors who relinquish their security interest at the time of liquidation under Section 53 of the Insolvency & Bankruptcy Code, 2016 (“the Code”). It further observed that secured creditors holding the first charge and subsequent changes in the security interest stand at an equal pedestal. This observation has caused confusion with respect to the preferential rights inter se secured creditors. This post aims to provide a critical evaluation of this judgment. Understanding ‘Charge’ & ‘Inter se Priority’ Section 2(16) of the Companies Act, 2013 defines “charge” as an interest created on the assets to secure the repayment of debt. Multiple charges can be created over an asset. Charges over an asset are frequently shared on a pari passu basis, placing all the charge holders at an equal pedestal. However, there can be inter se priority of charges as well, that allows first charge holders to satisfy their claim before the subsequent charge holders. Section 48 of the Transfer of Property Act, 1882 (“TOPA”) establishes the priority of the first charge holders over the subsequent charge holders in satisfying their claim. Section 52 of the Code provides two options for the secured creditors to realize their debts. Firstly, they can realize their security interest outside the liquidation process. Secondly, they can relinquish their security interest in favour of the liquidation estate and receive their share as per the waterfall mechanism laid down under Section 53 of the Code. However, Section 53 is silent on the inter se priorities among secured creditors. It does not provide whether the first charge holders will have priority over subsequent charge holders at the time of distribution of proceeds from liquidation estate. Factual Matrix In this case, the liquidator distributed the sale proceeds of the asset only among the first charge holders. Aggrieved by the liquidator’s decision, Technology Development Board (“the Appellant”), the second charge holder, filed a claim before the National Company Law Tribunal (“NCLT”). NCLT affirmed the inter se priority among the secured creditors and ruled in favour of the liquidator. The Appellant challenged this order before the NCLAT. The NCLAT held that inter se priority among secured creditors is allowed only when the security interest is realized outside the liquidation process but not during the relinquishment of security interest. It premised its order on the reasoning that in case of relinquishment, sale proceeds must be distributed as per Section 53 of the Code. The NCLAT further noted that Section 53 of the Code has a non-obstante clause and hence, overrides the application of Section 48 of the TOPA. The NCLAT concluded that there is no inter se priority among the secured creditors. Critical Analysis Overlooked judicial precedents and established principles In the present case, the respondent had relied on ICICI Bank v. Sidco Leathers Limited (“Sidco”) for one of his arguments. In Sidco, while interpreting Sections 529 and 529A of the Companies Act 1956, the Apex Court ruled that even though the debts of workmen and secured creditors are pari passu with each other, it does not nullify the inter se priority among secured creditors. To come to this conclusion, the court had relied on Section 48 of the TOPA. The Hon’ble Court observed that as the provisions of the Companies Act, 1956 are silent on inter sepriority among the secured creditors, the general law given under the TOPA must prevail. The judgment further noted that if the statute intended to take away the right to property of secured creditors, it would have explicitly stated so. However, the NCLAT disregarded this precedent. The NCLAT observed that the Sidco case was decided before the enactment of the Code. Furthermore, it noted that Section 48 of the TOPA would be inapplicable to this case as the non-obstante clause under Section 53 of the Code overrides any law enacted by the Parliament or State Legislatures. The authors submit that this interpretation given by the NCLAT is flawed. Firstly, Section 52 of the Code and Section 529 of the Companies Act, 1956 originated from the same provision, i.e., Section 47 of the Provincial Insolvency Act 1920. Section 52 of the Code states that in case of relinquishment, sale proceeds must be distributed in accordance with Section 53. Section 529 of the Companies Act, 1956 also talks about the waterfall mechanism during liquidation. As these provisions of the law have the same origin and are used in the same context of the waterfall mechanism during liquidation, their interpretation must also be alike. Therefore, if the Supreme Court in Sidco had interpreted Section 529 of the Companies Act, 1956  to be respecting inter se priority among secured creditors, then Sections 52 and 53 of the Code must also be given the same interpretation Secondly, In State of Bihar v. Bihar Rajya Mahasangh, the Hon’ble Supreme Court held, “A non-obstante clause is generally appended to a section with a view to give the enacting part of the section, in case of conflict, an overriding effect over the provision in the same or other act mentioned in the non-obstante clause.” On the reading of Section 48 of the TOPA and Section 53 of the Code, it is clear that there is no conflict between these sections as Section 53 is silent on inter se priority among secured creditors. Therefore, the NCLAT’s observation was erroneous as the non-obstante clause of Section 53 of the Code will not operate to override Section 48 of the TOPA. Incognizance of the Insolvency Law Committee Report 2018 Section 53 of the Code lays down the waterfall mechanism for distributing the proceeds of liquidation assets in a particular order of priority. Section 53(1)(b) puts the secured creditors and workmen at an equal ranking. Section 53(2) o the Code disregards all kinds

[By Abhishek Jha & Rishi Raj]  The authors are students at the Maharashtra National Law University, Aurangabad.  Introduction The Insolvency and Bankruptcy Code 2016 (“the Code”), a milestone in the Indian Legislative journey has by far been successful in safeguarding the interests of most stakeholders, if not all. However, one such stakeholder has lagged behind, i.e., the homebuyers. Even after substantial developments in the Code, the homebuyers still remain highly risk averse owing to the host of unresolved issues in the Real Estate sector. In this article, the authors will discuss the position of the homebuyers with respect to the Code. The Real Estate Sector has been witness to a steep increase in corporate insolvency resolution processes (CIRPs) over the course of four years. Such an increase was triggered by an ever-growing liquidity crisis and accelerated by the pandemic’s effect on the Real estate sector. As a result, the Real estate now accounts for more than 20 percent of the overall CIRPs initiated. Although the homebuyers have availed certain protection through courtroom victories, the skirmish is far from being resolved. This gets even more complicated when remedies are sought against pending projects that are already under moratorium. Therefore, the above warrants a re-visit to the Code for a brief analysis of the real extent of Homebuyers’ protection. Recent Developments  Under the Code, only financial creditors[i] constitute the Committee of Creditors (“COC”) and enjoy voting rights in the COC. However, such rights are not extended to the operational creditors[ii] which was worrisome as the homebuyers were recognized as “Operational creditors” within the Code. Therefore, the Homebuyers were deprived of certain important privileges, including the right to be represented in the Committee Of Creditors (“CoC”) and a favorable treatment for payment of debts. Thus, a growing demand was felt to recognize the homebuyers as “financial creditors”. Subsequently, in  Nikhil Mehta v. AMR Infrastructure, the NCLAT classified the allottees as ‘financial creditors’. It was observed by the NCLAT that the assured return scheme in the Buyer-BuilderAgreement(“Homebuyer’s agreement”) was ultimately a transaction wherein ‘financial credit’ was raised in the nature of the loan. In  Anil Mahindroo & Anr v. Earth Organics Infrastructure, the NCLAT concluded that an effect of commercial borrowing  could be seen within the terms of the homebuyer’s agreement. The effect amounted to financial credit within the meaning of the Code. Ultimately, the IBC (Amendment) Ordinance, 2018 came into existence, placing the allottees on an equal pedestal as other financial creditors like Banks, NBFCs, etc. Such inclusion was necessary as the builders usually raise huge capital through home buyers, a primal example of this can be found in cases like Chitra Sharma v. Union of India in which, a whooping INR Fifteen Thousand Crore was owed to the Homebuyers. However, it cannot yet be concluded that an inclusion of homebuyers as Financial Creditors sufficiently equips the homebuyers to get justice. This is because the effect of inclusion was diluted by the changes in legislation discussed below. 2.1 Placing homebuyers with Financial Creditors: a relief or a patch-work? A positive yet incomplete step towards securing justice for homebuyers was to secure the status of financial creditors bestowed upon them under the Code as per Section 5(8). However, the legislature, while providing this right, has also neutralized its effects by attaching certain conditions to it. The IBC 2019 Ordinance (now replaced by the 2020 Amendment Act) sought to impose a threshold limit on the homebuyers to initiate CIRP. Section 7 of the ordinance required no less than 100 or 10% homebuyers, whichever is less, to initiate insolvency against the builder. Further, the amendment also barred a single buyer from approaching the NCLT under Section 7 of the Code. Therefore, the homebuyers’ failure in achieving such numbers would seriously cripple the pursuit of availing their home units. 2.2 Challenges to the threshold: Karvy Investor’s case The Ordinance was subsequently challenged upon its constitutional validity before the hon’ble the Supreme Court in Manish Kumar v Union of India. The Supreme Court initially imposed a stay on the ordinance, but ultimately upheld the threshold limit under the IBC 2019 ordinance stating that “the mere difficulties in given cases to comply with a law can hardly furnish a ground to strike it down”. The hon’ble Supreme court also refused to delve into the question of constitutionality with regards to the threshold requirements which according to petitioners amounted to class creation  amongst the Financial Creditors violating Article 14 of the Constitution. Meanwhile, an amendment to IBC was introduced in 2020 (the 2020 amendment) which again imposed the aforementioned threshold to initiate CIRP. Subsequently, the 2020 amendment was also challenged before the Hon’ble Supreme Court  in the Association of Karvy Investors v. Union of India & Ors. The plea stated that the 2020 Amendment has imposed a severe and almost impossible condition on the right of an individual financial creditor to file an application to initiate CIRP. . Even though a deviation from the decision in Manish Kumar (Supra) is highly unlikely, the Karvy investors case has been filed and remains pending before the SC. A setback from the Supreme Court In Shelly Lal & Ors v. Union of India & Ors, an amount of INR 49 crore was raised from the Homebuyers for real estate project in Noida Sector but the directors of the project absconded and the project was stalled. In the wake of this, the homebuyers approached the Supreme Court under Article 32 and requested the Apex Court to take a supervisory role of the project. However, the apex Court shied away from passing any relief premised upon the reasoning that managing day to day supervision of the project is outside the purview of the Judiciary and the court is not competent to do so. The apex court justified taking such a stance by highlighting that the law has improved considerably and now Homebuyers can approach alternative forums such as the consumer court or the Real Estate Regulatory Authority. On similar lines, in Upendra Choudhury v. Bulandsahar Development Authority and

[By Sourav Jena & Shivani Pattnaik] The authors are students at the National Law University, Odisha.  The insertion of Section 29A in the Insolvency and Bankruptcy Code, 2016 (“IBC”) has been a turning point in the Corporate Insolvency Resolution Process (“CIRP”). Prior to its existence, any individual who submitted a resolution plan could qualify as a resolution applicant. However, this technicality served as a ‘back-door entry’ for individuals who contributed to the default of the corporate debtor to reclaim key managerial control by outbidding other financial institutes. Therefore, Section 29A serves as a ‘restrictive provision’ by narrowing the scope of eligibility of a resolution applicant. In pursuance of securing the interests of the corporate debtor, the Supreme Court of India (“SC”) in the recent judgment of Arun Kumar Jagatramka v. Jindal Steel and Power Ltd. and Anr. has held that individuals disqualified under Section 29A of IBC would also stand to be disqualified under Section 230 of the Companies Act, 2013(“the Act”). Consequently, individuals shall not make any compromise /arrangement with creditors and members as provided under Section 230 of the Act if they fail to qualify as resolution applicants. The article seeks to present the facts of the case, and findings of the Court along with a critical analysis of the status quo of corporate insolvency in light of the judgement. Background The background of the case spans two separate civil appeals and a writ petition. Facts of Civil Appeal No. 9664 of 2019 On 07.04.2017, corporate applicant ‘Gujarat NRE Coke Limited’ (“GNCL”) filed an application to initiate the CIRP. One of its promoters namely, Mr. Arun Kumar Jagatramka sought to present a resolution plan before the Committee of Creditors (“CoC”). Meanwhile, Section 29A was inserted into the IBC wherein Section 29A(g) prohibits a promoter of the corporate debtor to be eligible as a resolution applicant. As a consequence, Mr. Jagatramka failed to qualify, thereby, prompting the National Company Law Tribunal (“NCLT”) to initiate the liquidation of GNCL in the absence of any other resolution plan. Whilst Mr. Jagatramka challenged the NCLT order before the National Company Law Appellate Tribunal (“NCLAT”), he proceeded to present a scheme of compromise and arrangement to which the NCLT directed for a meeting to be conducted to approve the same. However, an operational creditor viz. Jindal Steel and Power Ltd. (“JSPL”) appealed to the NCLAT against the NCLT order. It was held that as a promoter of the corporate debtor, Mr. Jagatramka was ineligible to become a resolution applicant, thereby, relinquishing the power to propose a scheme of compromise and arrangement for creditors and members. Facts of Civil Appeal No. 2719 of 2020 On 05.04.2018, the NCLT directed the CIRP of Su-Kam Power Systems Ltd. (“Su-Kam”). Mr. Kunwer Sachdev, one of the promoters, submitted a resolution plan on 15.11.2018. However, with the amendment of the IBC, he became ineligible to qualify as a resolution applicant. Hence, Su-Kam was directed to be liquidated. On the appeal against the appointment of the liquidator, NCLAT not only upheld the decision but also directed the liquidator to invite applications for compromise and arrangement with creditors. Mr. Kunwer, having applied to submit a scheme, was again found ineligible to do so, thereby, giving rise to a slew of appeals. Writ Petition Civil No. 269 of 2020 Regulation 2B delineates compromise and arrangement under Section 230 of the Act was challenged to be ultra vires the IBC as it was inserted by an amendment notification dated 25.07.2019 under the IBBI (Liquidation Process) Regulation, 2016. Issues and Contentions The question of law SC dealt with was whether an ineligible resolution applicant could submit a scheme for compromise during liquidation. The promoters put forth that the ineligibility under Section 29A was applicable only during resolution. This resolution was distinct from proposing a scheme of compromise under Section 230 of the Act, which connotes ‘settlement mechanism.’ Furthermore, Regulation 2B of the Liquidation Regulation was put under the scanner for being violative of  Articles 14, 19, and 21 of the Indian Constitution alleging that it sought to draw a parallel between ineligibility under Section 29A of the IBC to the distinct provision of Section 230 under the Companies Act. However, the Respondents drew attention to the inherent objective of Section 29A which was to keep individuals, responsible for default of the corporate debtor, away from gaining control of the corporate debtor’s assets. Therefore, the Respondents argued that the resolution process under Section 29A and the liquidation process were shown to be inconsistent by the promoters in order to utilize the loophole. Findings of the Court The SC reasoned that liquidation proceedings under the IBC and the proposal of the scheme of compromise under Section 230 lay on the same spectrum. While referring to the Swiss Ribbon v. UOI case, the SC mulled over the intent behind introducing Section 29A and concluded that Section 29A would pervade Section 35(1)(f) of the IBC during the liquidation process. Furthermore, it was observed that courts should be open to interpreting Section 29A in light of Section 230 of the Act in a manner that does not defeat the purpose of their statutory linkage. In addition, while analyzing the utility of both the Sections, the  SC opined that the legislative intent behind  Section 230 of the Act is to “ensure revival and continuation of the corporate debtor by protecting it from liquidation.” Moreover, the restrictions under Section 35(1)(f) of IBC acts as an extension to that protection and therefore, shall be applicable. While referring to the Meghal Homes case, the SC contemplated questions raised upon Regulation 2B and stated that the raison d’etre behind the resolution process cannot be distinct from the liquidation process and the same was clear in the regulatory provisions. Therefore, the SC upheld that persons ineligible under Section 29A would also be ineligible to propose a scheme of compromise under Section 230.  Critical Analysis The recent judgment of Arun Kumar Jagatramka has partly addressed the issue of the scheme of arrangement in the

[By Samar Pratap] The author is a student at the Institute of Law, Nirma University.   Introduction The third parties are prohibited from terminating, stopping, or interrupting the supply of essential goods and services to the corporate debtor under Section 14(2) of the Insolvency and Bankruptcy Code (hereinafter referred as “IBC”). The Insolvency and Bankruptcy Board of India Regulations 2016 (CIRP Regulations) describe “essential goods and services” broadly, referring only to four types of supplies: (a) electricity, (b) water, (c) telecommunication services, and (d) information technology services. The four materials are considered basic necessities for any corporate debtor to stay in business, and they are not intended to be supplied in large quantities for commercial gain. In fact, NCLTs have not only restored the corporate debtor’s supply of these goods but have also gone beyond the limits of this provision to order the continuation of other supplies that were deemed essential to the corporate debtor’s operations. The Insolvency Law Committee concluded in a report reviewing problems with the IBC’s implementation that the four listed supplies might not be sufficient to keep the corporate debtor operating as a going concern, and that other important supplies, such as input supplies, may be needed. Further, the Insolvency Law Committee noted that, during the CIRP, personal negotiations with providers to extend existing contracts were not every time effective, particularly when supplies are difficult to replace and suppliers who exist seek a large sum of money to retain supply. The Insolvency Law Committee proposed that the IBC be revised to allow for more flexibility in determining the products and services that are essential for the corporate debtor’s operations. The IBC’s adoption of Section 14(2A) gives legislative effect to this viewpoint, allowing Resolution Professionals (RPs) to prohibit the termination of products and services that they consider ‘critical to protect and maintain the value of the corporate debtor and control the operations of such corporate debtor as a going concern.’ During the moratorium period, the suppliers, on the other hand, are not obligated to continue supplying if there is a default for the payment of supplies on the part of the corporate debtor. Although more information about how this amendment will be implemented is awaited. Inconsistencies in Amendment Both, the proposed CIRP Regulations or the Insolvency and Bankruptcy Code do not include any guidelines about how to assess which supplies are essential. If the corporate debtor is able to find alternative suppliers, can the supply be deemed critical? What if engaging alternative supply is inefficient in terms of time? Different stakeholders can interpret the term important in different ways. According to the Insolvency Law Committee, Resolution Professionals (RPs) should determine whether the supplies have a direct and substantial nexus with keeping the corporate debtor functional, as well as whether they can be easily replaced. These criteria, however, were not included in the revised legislation. As a result, the concept of vital supplies is vague, and its application is left to judicial discretion. Although an extensive list of critical supplies would negate the amendment’s aim. Therefore, there is a need for simple legislative conceptual frameworks for determining the scope of critical supplies. Suppliers and mediation experts would be able to decide if a specific supply can be terminated without resorting to formal adjudication processes with the help of such guidelines, such as – determining that supplies must have substantial and direct nexus with keeping the corporate debtor functional or supplies should be such, so as to maintain a balance between both the interest of supplier and the corporate debtor. This would reduce the amount of time and money spent on the resolution process, as well as the number of cases handled by insolvency tribunals. Such measures will bring uniformity and predictability to adjudication when parties approach insolvency tribunals for a formal decision. No guarantee of reward & No guarantee of payment Section 14(2A) allows the corporate debtor to pay for products and services rendered during the CIRP as a way of protecting essential suppliers. Suppliers have the right to stop providing services if the corporate debtor does not make timely payments. Although this offers a solution in the event of a payment default, suppliers are not given any specific guarantee of payment in order to maintain supplies. As a result, critical suppliers have no choice but to bear the dreadful chance of corporate debtor default. This risk is amplified if the contract calls for payment of products following delivery or performance of a service. If we see at the laws in UK and US, they have more concrete provisions for essential suppliers, such as payment assurance in the form of guarantees or other agreed-upon means and personal responsibility for payment of materials by the insolvency representative. Essential suppliers should also be granted statutory protection, according to the UNCITRAL Legislative Guide on Insolvency Law. It states that a policy in this area should consider a variety of considerations, including the value of the contract to the proceedings, the expense of providing the requisite security to the proceedings, whether the debtor would be able to fulfill the obligations under a continued contract, and the effect of requiring the counterparty to bear the risk of non-payment. These features ensure that essential suppliers are paid regardless of the corporate debtor’s insolvency, and during the resolution phase, they have protected from financial liability if the corporate debtor experiences business or operational setbacks. Incorporating essential supplier rights will not only provide the necessary comfort to those suppliers but also enable non-critical suppliers to continue doing business as normal, improving the corporate debtor’s value and efficiency. From a legal standpoint, it may be worthwhile to consider using the IBC’s creditor-driven system to pursue payment assurance. A financial creditor in the Committee of Creditors may provide security in the form of a surety, letter of credit, or other agreeable means on behalf of the corporate debtor if the COC tasked with pioneering the CIRP believes the corporate debtor is a sustainable organization. The financial creditor does not have to

[By Pranav Karwa and Gaurav Karwa] Pranav is a student at the National Law University, Jodhpur and Gaurav is a student at the West Bengal National University of Juridical Sciences.   Pre-pack insolvency process involves an arrangement between the debtor and the creditor to negotiate the sale of assets before initiating the insolvency proceedings via the court or any other appropriate forum so as to enable resolution and debt recovery at a faster pace than the regular insolvency resolution process. This practice was prevalent in countries like the USA and UK since 1978, however, recently, the Insolvency and Bankruptcy Board of India notified the Insolvency and Bankruptcy Board of India (Pre-Packaged Insolvency Resolution Process) Regulations, 2021 ( “Pre-Pack Regulations”) for MSMEs, which are squarely based on the Report of the Sub Committee of the Insolvency Law Committee, chaired by Dr. M.S. Sahoo. One of the most striking recommendations made by the sub-committee was the “debtor in possession model.” As per this model, during the pre-pack insolvency process, the promoters are permitted to remain in the Management of the affairs of the Corporate Debtors except for the matters covered under § 28 of the Insolvency and Bankruptcy Code, 2016 (“the Code”), which require mandatory approval of Committee of Creditors (‘CoC’). This recommendation of the sub-committee has been retained under Chapter X, Rule 50 of the Pre-pack Regulations, with minor changes. The authors believe that the “debtor in possession model” is in stark contrast to the existing insolvency regime in India and is marred with various inconsistencies and difficulties. Critical Analysis of Debtor in Possession Model proposed under the Pre-Pack Regulations The authors believe that ‘debtor in possession of the management model’ is fundamentally contrary to the well-established principles of insolvency jurisprudence in India. It seeks to place the same set of promoters back in the helm of affairs who are ultimately responsible for dragging the company to insolvency. 29A of the Code lays down the eligibility criteria of resolution applicants and bars certain classes of persons from submitting a resolution plan. Therein, promoters of the Corporate Debtor are barred from submitting a resolution plan. The rationale behind this rule is to keep the persons responsible for the default of the Corporate Debtor out of its Management. Moreover, as observed by Supreme Court in Chitra Sharma v Union of India, the primary intention of inserting § 29A in the Code is to prevent people responsible for the insolvency of the Corporate Debtor from getting a backdoor entry in the Management of Corporate Debtor. This practice further ensures effective corporate governance and the maintenance of public interest. It, thus, becomes clear that the legislature and judiciary have been highly concerned about the involvement of promoters in the Management of Corporate Debtor, and this apprehension justifies the rationale behind the insertion of § 29A. The ‘debtor in possession model’ under the Report of the Sub-Committee and Rule 50 of the Pre-Pack Regulations goes squarely against the very spirit of § 29A as even after the initiation of the Pre-Packaged Insolvency Process, the promoters remain at the helm of affairs. Moreover, recently, in Arun Kumar Jagatramka v. Jindal Steel and Power Limited, the Apex Court decided whether the promoters, who are ineligible u/s 29A of the Code, can propose any scheme of arrangement u/s 230 of the Companies Act, 2013. The Court observed that § 29A of the Code ensures a sustainable revival of the Corporate Debtor and is grounded on the fact that the person responsible for the problem cannot participate in resolving the problem. Finally, the Court disallowed such promoters, ineligible u/s 29A of the Code, from submitting a compromise or arrangement u/s 230 of the Companies Act, 2013 as it would be manifestly arbitrary. Therefore, a corollary to bar u/s 29A of the Code is a bar from proposing any scheme u/s 230 of the Companies Act, 2013. Furthermore, there is a power and responsibility mismatch for Resolution Professionals under the Pre-Pack Regulations. Minimal powers have been given to the Resolution Professional to visit Corporate Debtor’s premises, inspect assets and prepare a monthly report with the Corporate Debtor for CoC, among others under Rule 50 of the Pre-Pack Regulations. Ultimately, the Management of the Corporate Debtor does not transfer to the Resolution Professional on initiation of the Pre-Pack Insolvency Resolution Process. Therefore, it may become practically difficult for the Resolution Professionals to discharge their statutory obligations. For instance, a Resolution Professional has to undertake multiple responsibilities like overseeing an independent asset valuation and also conducting an eligibility test under § 29A as to proposing resolution plan. However, it may become difficult for Resolution Professional to complete all these duties in a ninety-day timeline when the Resolution Professional is not in Management or responsible for preserving the value of assets. The way forward: Suggestions The authors believe that Pre-Pack Insolvency Resolution Process has remained unexplored and can reduce the pendency of insolvency matters if implemented in the proper form. The Pre-Packs can wholly revolutionise how insolvency resolution takes place, which is necessary, considering the Indian economy is gripped with the challenge of mounting Non-Performing Assets at present. Further, it is feared that soon after the ban on insolvency application is lifted on 25th March, 2021, an upsurge in insolvency applications under the Code may temporarily derail the insolvency resolution process. Thus, the Sub-Committee of Insolvency Law Committee has rightly observed that the real test of Pre-Pack Insolvency will be how it pans out once implemented during the COVID-19 Pandemic and even post-pandemic. Also, the Scheme, as introduced by Pre-Pack Regulations, is only in its nascent stage and will require requisite revisions to suit the Indian Insolvency Regime. For instance, presently, the Promoter has been given a very significant role in the Management during the Pre-Pack Insolvency Resolution Process. Thus, Rule 50 of the Pre-pack Regulations must be revised to completely exclude the Corporate Debtor/Promoter role in the Management once the resolution process starts. Moreover, instead of opting for a single option Pre-Pack