Pre-Packaged Insolvency Resolution Process for MSMEs under the Insolvency and Bankruptcy Code, 2016: A Critical Study of Judicial Interpretation and Legislative Reforms

Micro, Small and Medium Enterprises produce close to a third of India's GDP, yet the Corporate Insolvency Resolution Process under the Insolvency and Bankruptcy Code, 2016 proved too costly, slow and stigmatising for them. In response, the 2021 amendments inserted Chapter III-A (Sections 54A to 54P), creating the Pre-Packaged Insolvency Resolution Process. Under this hybrid model, the debtor stays in possession while creditors stay in control, and resolution is meant to finish within 120 days. Nearly five years later, the mechanism has been used remarkably little.

This doctrinal and comparative study traces the pre-pack from informal practice in the United Kingdom and the United States to its codification in India. It examines the statute, rules and regulations, including the 2026 amendments, alongside the developing case law of the NCLT, NCLAT and Supreme Court. It then compares India's design with pre-pack administration in the United Kingdom, Subchapter V in the United States and Singapore's pre-pack scheme of arrangement.

The study finds that tribunals scrutinise eligibility at admission rigorously and consistently. However, they have diverged on the fourteen-day priority rule, and they protect dissenting creditors through general company law rather than any remedy within Chapter III-A. The official figures are stark:

Only sixteen pre-pack admissions by September 2025, against more than 8,700 CIRP admissions.

A realisation rate of 25 per cent, against 32 per cent under CIRP.

In the one fully traceable matter, a timeline overrun of about six times the statutory target