30) Pre-Packs Flashcards
1
Q
What are Prepacks ?
A
It is a preplanned process in which a financially distressed company and its creditors reach an agreement with a buyer for its sale prior to initiating insolvency proceedings
2
Q
When does the sale happen ?
A
On the date of initiation of insolvency proceedings or after the appointment of insolvency administrator
3
Q
Why is this in news ?
A
Ministry of Corporate Affairs has setup a committee to look into possibility of Pre-Packs under current insolvency regime
4
Q
What is the potential drawback of this method ?
A
Reduced transparency compared to Corporate Insolvency Resolution Process (CIRP) as financial creditors would reach an agreement with a potential investor privately and not through an open bidding process
