+
SC ruling empowers MSME promoters to submit resolution plans under IBC
ECONOMY & POLICY

SC ruling empowers MSME promoters to submit resolution plans under IBC

In a landmark judgment, the Supreme Court has clarified the applicability of Sections 29A and 240A of the Insolvency and Bankruptcy Code (IBC), providing a significant boost to Micro, Small, and Medium Enterprises (MSMEs) facing insolvency.

The Court ruled that the eligibility for MSME promoters to submit resolution plans under Section 240A should be determined by the date of submission of the resolution plan, rather than the commencement of the Corporate Insolvency Resolution Process (CIRP). This decision overturns a previous ruling by the National Company Law Appellate Tribunal (NCLAT), which had barred MSME promoters from submitting plans if their MSME certification was obtained after the CIRP began.

This ruling supports the objective of protecting MSME businesses from harsh measures under Section 29A and ensures that viable businesses can survive and revive. The 2018 Insolvency Law Committee had recommended that non-wilful defaulter promoters be allowed to reclaim their businesses, fostering an environment conducive to revival and protecting employment.

In the case of Hari Babu Thota, the Supreme Court ruled that MSME promoters are eligible to participate in the resolution process as long as they obtain MSME certification before submitting their resolution plan. This judgment reinforces the IBC’s focus on corporate revival rather than liquidation, giving MSME promoters a chance to regain control of their businesses and navigate financial distress.

The ruling aligns with the broader goals of economic resilience and growth in India, emphasizing the importance of facilitating business recovery and preserving employment.

In a landmark judgment, the Supreme Court has clarified the applicability of Sections 29A and 240A of the Insolvency and Bankruptcy Code (IBC), providing a significant boost to Micro, Small, and Medium Enterprises (MSMEs) facing insolvency.The Court ruled that the eligibility for MSME promoters to submit resolution plans under Section 240A should be determined by the date of submission of the resolution plan, rather than the commencement of the Corporate Insolvency Resolution Process (CIRP). This decision overturns a previous ruling by the National Company Law Appellate Tribunal (NCLAT), which had barred MSME promoters from submitting plans if their MSME certification was obtained after the CIRP began.This ruling supports the objective of protecting MSME businesses from harsh measures under Section 29A and ensures that viable businesses can survive and revive. The 2018 Insolvency Law Committee had recommended that non-wilful defaulter promoters be allowed to reclaim their businesses, fostering an environment conducive to revival and protecting employment.In the case of Hari Babu Thota, the Supreme Court ruled that MSME promoters are eligible to participate in the resolution process as long as they obtain MSME certification before submitting their resolution plan. This judgment reinforces the IBC’s focus on corporate revival rather than liquidation, giving MSME promoters a chance to regain control of their businesses and navigate financial distress.The ruling aligns with the broader goals of economic resilience and growth in India, emphasizing the importance of facilitating business recovery and preserving employment.

Next Story
Infrastructure Energy

Shakti Pumps Raises Rs 2.92 Bn via QIP for Solar Expansion

Shakti Pumps (India) has successfully concluded its Qualified Institutions Placement (QIP), raising Rs 2.92 billion from prominent institutional investors. The issue received strong interest from both existing and new investors, reflecting their confidence in the company’s long-term growth trajectory.The funds raised will be deployed to establish a greenfield high-efficiency solar DCR cell and solar PV module manufacturing facility in Pithampur, Madhya Pradesh. The project, to be undertaken through its subsidiary Shakti Energy Solutions, will have a production capacity of 2.20 GW. This move ..

Next Story
Technology

Orient Technologies Unveils New Digital Identity on 28th Foundation Day

Orient Technologies, a leading provider of digital transformation and IT infrastructure services, has launched its refreshed digital identity to mark its 28th Foundation Day. The new identity reflects the company’s evolution from a trusted systems integrator to a strategic partner in digital transformation, while reaffirming its commitment to customer-centric innovation.Central to the brand refresh is the upgraded website, designed for intuitive navigation and aligned with client expectations. Services are now streamlined under two clear verticals—IT Infrastructure Solutions and Applicatio..

Next Story
Infrastructure Urban

OLX India Launches 'Elite Buyer' Program to Enhance User Experience

OLX India, one of the country’s leading platforms for used products, has launched the Elite Buyer program to offer a high-intent, efficient buying experience. Designed to meet the evolving expectations of digital-first consumers, the program streamlines buyer-seller interactions, enabling quicker, more trusted transactions.With over 180 million users annually, OLX facilitates $3 billion worth of used goods transactions across categories such as cars, real estate, electronics, and furniture. The platform supports more than 53 million buyers and 18 million sellers, underscoring its scale and i..

Advertisement

Advertisement

Subscribe to Our Newsletter

Get daily newsletters around different themes from Construction world.

STAY CONNECTED

Advertisement

Advertisement

Advertisement

Advertisement

Talk to us?