Pre-packs in the Indian Insolvency Regime

29 Am. Bankr. Inst. L. Rev. 231 (2021)

46 Pages Posted: 28 Sep 2020 Last revised: 23 Aug 2021

See all articles by M. P. Ram Mohan

M. P. Ram Mohan

Indian Institute of Management Ahmedabad

Vishakha Raj

Indian Institute of Management Ahmedabad

Date Written: August 10, 2020


Pre-packaging allows a distressed company to negotiate a plan with its creditors and a purchaser before entering formal insolvency proceedings. By allowing the terms of a plan to be negotiated before formal proceedings, pre-packs provide a quick and discreet way of completing the insolvency resolution process. The speed and confidentiality offered by pre-packs have made them prevalent in the United Kingdom and the United States; however, these advantages come with trade-offs. Creditors' voting rights under the regular insolvency resolution process are circumvented by the pre-pack process. The US has two pre-pack processes, one that requires creditor approval and another that does not. In the UK and the US, there has been opposition to regulating pre-packs that do not need creditor approval because reforms that increase creditor participation will reduce the speed associated with such pre-packs. In India, pre-packs have not evolved through the present insolvency regime as it does not allow for the assets of a debtor to be sold without its creditors’ approval. The Insolvency and Bankruptcy Board of India is considering introducing pre-packs in India and faces unique challenges because of some of the features of India's insolvency regime. Insolvency law in India places limitations on the participation of a company's directors and promoters in insolvency proceedings and also has broad avoidance provisions which can complicate the implementation of pre-packs. This Paper discusses these challenges and uses the experience of the UK and the US to suggest a framework for the introduction of pre-packaged insolvency in India. After evaluating the pre-pack regimes in the UK and the US, we conclude that it would be optimal for India to retain creditor protections and require creditor approvals in its pre-pack regime. This would ensure that pre-packs can be discreetly implemented and also avoids the disenfranchisement of creditors.

Keywords: insolvency, bankruptcy, India, pre-packs

JEL Classification: K10, K33, K35

Suggested Citation

M. P., Ram Mohan and Raj, Vishakha, Pre-packs in the Indian Insolvency Regime (August 10, 2020). 29 Am. Bankr. Inst. L. Rev. 231 (2021), Available at SSRN: or

Ram Mohan M. P. (Contact Author)

Indian Institute of Management Ahmedabad ( email )

Ahmedabad, Gujarat 380015

Vishakha Raj

Indian Institute of Management Ahmedabad ( email )

Ahmedabad, 380015

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