As per Section 240A of the IBC, 2016, which was introduced by the 2018 Amendment to the Code, makes an exception for MSMEs from Section 29A, which specifies the Non-MSME Corporate persons not eligible to be resolution ap

Pre-requisites for initiation of Pre-packed Insolvency Resolution Process: PPIRP may be initiated only by a Corporate Debtor which is an MSME under Section 7(1) of the MSME Development Act, 2006. According to Form-1 specified in the Insolvency and Bankruptcy (PPIRP) Rules, 2021, only MSMES Registered as Companies or Limited Liability Partnerships have the eligibility to commence PPIRP. In order to prove the status of Corporate Debtor as an MSME, the application for PPIRP must provide either a Current Udyam Registration Certificate or documentation showing investment in Plant and Machinery or Equipment, along with turnover details. Before initiating a PPIRP, a Corporate Debtor is required to fulfil certain requirements which include eligibility criteria such as being an MSME with a minimum default amount of at least ₹ 10 Lakhs, and eligible to submit resolution plan under Section 29A of the Insolvency and Bankruptcy Code (IBC). Additionally, the Corporate Debtor cannot initiate a PPIRP if it has undergone CIRP or PPIRP within the last three years, if it is currently undergoing CIRP, or if a liquidation order has been issued against it under section 33 of the Code. Furthermore, before beginning the Pre-pack Process, the Corporate Debtor must: Choose Resolution Professional: The Corporate Debtor convenes a meeting of its unrelated financial creditors to propose and approve the appointment of an insolvency professional as the RP. Declaration by majority of the directors/partners: Majority Partners or Directors of the debtor must make a declaration specifying the application timeline (max 90 days), PPIRP is not initiated to defraud creditors and the name of proposed insolvency professional as resolution professional by Financial Creditors in their meeting. Special Resolution: Additionally, members must pass a Special Resolution (patterns by 3/4 th majority in case of LLP) to approve the initiation of PPIRP. Obtain Creditor Approval: Unrelated Financial Creditors (FCs) must approve filing of application of initiating PPIRP by a 66% majority at a meeting of the Unrelated Financial Creditors convened by the CD as per Section 54A (3) of the Code In case there are no Unrelated Financial Creditors (UFCs), a meeting of Unrelated Operational Creditors (UOCs) (10 largest Operational Creditors by value and one representative of workmen and employee each) may be convened where UOCs perform the duties and functions of the UFCs according to the Regulations.