Insolvency and Bankruptcy Board of India (IBBI), SIPI – an independent think-tank on insolvency, INSOL India – the leadership body of insolvency stakeholders, FISME and Indian Industries Association (IIA) recently organised a roundtable of MSME representatives, professionals who assist MSMEs in their business activities, CAs and bankers engaged in MSME financing to obtain their feedback and suggestions on the draft resolution on Fast Track Resolution solution under the Insolvency and Bankruptcy Code of India at IIA Head Office in Lucknow.
The programme was introduced by Manmohan Agarwal, Secretary, IIA. Manish Goel, President, IIA, in his welcome address said that it is easy to set up a business than to exit the same in case of its failure and therefore here is a great need for an easy exit route option to be made available for the sick units. The programme was attended by a large number of professionals, industrialists, IIA members, former Presidents of IIA and other office-bearers.
Anil Bhardwaj, Secretary General of Federation of Indian Micro, Small and Medium Enterprises, in his opening remarks said that in MSME sector failure is a norm but success is rare.
“The condition of MSME entrepreneurs is no different than the farmers engaged in commercial crops. In fact as per a study report more MSME entrepreneurs have committed suicide as compared to farmers in India. In India, the debate and discussion on insolvency is on for several decades. In 1988, NAYE (the parental body of IIA and FISME) organised Udyami Mahasammelan in Lucknow wherein we raised the issue for early decision for the rehabilitation and exit of MSMEs. Even after about 20 years, we are still discussing the same,” Bhardwaj said.
Deputy GM of Insolvency and Bankruptcy Board of India Sanjeev Pandey highlighted the facts and the process of taking relief under The Insolvency and Bankruptcy Code. He said that all the previous laws related to sick units such as SICA, SARFAESI, etc have been transformed into a single self-sufficient legislation so as to provide an ease to the sick units.
“All the good ideas from the British Insolvency Law have been extracted with the basic objective to make the company survive and opt for resolution rather than dissolution,” Pandey said.
Based on the discussions in this round table meeting, Indian Industries Association (IIA) decided to submit the following recommendations to IBBI, Government of India for inclusion in the Fast Track Resolution under the Insolvency and Bankruptcy Code of India. Firstly the eligibility for Fast Track Resolution in MSME sector should be kept as Rs 20 crore annual turnover irrespective of the constitution of the enterprise. Secondly, care must be taken to include proprietorship and partnership firms in MSME Sector for applicability of Fast Track Resolution, because about 98 per cent enterprises in MSME sector are either proprietorship or partnership firms. IIA would also recommend that IP (Insolvency Professional) Fee and all other applicable fees in the Fast Track Resolution under Insolvency and Bankruptcy Code of India should be exempted for MSMEs because a sick MSME will not be able to afford the fees.
Source: Times of India
