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Scrutinizing The Pre-Packaged Insolvency Resolution In Reference To SDG 8

The Sustainable Development Goals which are also known as Global Goals, which are the goals that all the countries of the world strive to achieve are adopted by the United Nation Member States in 2015. There are 17 such goals identified and brought in action for social economic and environmental sustainability.[1]

The UNDP is helping the countries of the world to achieve the goals and is targeted to be achieved by 2030. The 8th SDP, that states to promote sustained, inclusive and sustainable economic growth, full and productive employment and decent work for all. This goal has been formulated as after observing that majority of the workers are out of the poor living condition that they used to live in, despite of the economic recession of 2008 faced by the world. But there is a very low rate of economic growth and widening of the inequality of income amongst the different income groups of people. A study indicates that due to rapid increase in the labour force, the unemployed force increases by 1 million every year.[2]

This is a very crucial problem in India also. Due to this large population and a large labour force, the rate of unemployment is very high is India. The major agenda was to Support per capita monetary development as per public conditions and, specifically, at any rate 7% GDP development per annum at all created nations, and Strengthen the capacity of domestic financial institutions to encourage and expand access to banking, insurance and financial services for all.

The Insolvency and Bankruptcy (Amendment) Ordinance, 2021, received the Presidentís assent on April 4, 2021 and the plan to amend the code was approved by the cabinet. The main aim of the Ordinance of 2021 is to amend or to provide an alternative mechanism for the insolvency resolution of a specific class of corporate personality, such as micro, small, and medium enterprises.

The main objective behind such change of mechanism is to fortify that there is speedy, cost effective, and value maximizing to all the stakeholders and to ensure that no stakeholder is disappointed due to the lengthened insolvency process and there is no escape for the Corporate Debtor or any malice intention on his part. This amendment has been proposed taking in view the affect of pandemic on such small-scale businesses. The limit set for such insolvency is between 10 lakh to 1 crore. Sec.54A has been introduced as for such insolvency resolution.[3] An entire new chapter has to be added to the code and also amends many provisions for the same purpose.

Reviewing the Ordinance apropos of Sustainable Development Goal 8

The very purpose of the Insolvency and Bankruptcy (Amendment) Ordinance, 2021, on the Pre-packaged Deals is to quicken up the Insolvency Process of the small-scale business, where the maximum limit provided for the same is 120 days. It is cost effective and also the corporate debtor has a say during the insolvency process at the same time mechanism has also been provided where the promoters cannot misuse their powers during the insolvency process.

Also, it prevents the unemployment of the large number of people employed and also helps in reaching an amicable settlement.[4] The main difference between Pre-Packaged Insolvency Resolution and Corporate Insolvency Resolution Plan is that the prior is an out of court settlement process and ideally do not need the inclusion of Courts for the same, whereas in the later part, there is mandatory involvement of Courts in the Insolvency Process.

The Corporate Debtor can hold on to manage the business in the prior process, whereas in the later process there is a compulsory appointment of Resolution Professional. [5] Thus, this would help in fulfilment of the Sustainable Development Goal 8, which is related to economic growth and sustainable employment.

Whenever, such small-scale business owners would seem that it is making loss more than the profits, the hassle free and speedy mechanism can be adopted by the Corporate Debtor itself and also takes care of the further employment of the employees employed in the business and hence they are not unemployed.

Conclusion
The United Nations have formed Sustainable Development Goals for the member states and economic growth and employment is an important aspect of the same. The IBC Ordinance of 2021, on Pre-Packaged Insolvency Resolution, provides a friendly, amicable and speedy out of court mechanism for a set of Corporate Debtors. If implemented entirely and efficaciously, it would be of great help in implementing and achieving the goal.

End-Notes:
  1. Sustainable Development Goals, United Nations Development Programme (Apr. 17, 2021, 04:09 PM), https://www.google.com/search?q=undp+full+form&oq=undp+&aqs=chrome.1.69i57j0i433l3j0j0i433i457j69i60l2.4972j0j7&sourceid=chrome&ie=UTF-8
  2. Goal 8: Decent Work and Economic Growth, United Nations Development Programme (Apr. 17, 2021, 04:09 PM), https://www.undp.org/content/undp/en/home/sustainable-development-goals/goal-8-decent-work-and-economic-growth.html.
  3. Insolvency and Bankruptcy Code Ordinance 2021- Explained, Pointwise, Forum IAS (Apr. 17, 2021, 04:57 PM), https://blog.forumias.com/insolvency-and-bankruptcy-code-ordinance-2021-explained-pointwise/.
  4. Ibid.
  5. Milind Parikh, Analysis on Effect of Pre-Packaged Deals Ordinance Vis-ŗ-vis Sustainable Development Goal 8, Taxguru, (Apr. 17, 2021, 05:13 PM) https://taxguru.in/corporate-law/analysis-effect-pre-packaged-deals-ordinance-vis-avis-sustainable-development-goal-8.html.

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