India has proposed a pre-packaged insolvency option that will allow creditors and debtors to work on an informal plan and then submit it for approval even as the nation braces for a spike in bankruptcies once the freeze on filings is lifted, Bloomberg News reported. The Ministry of Corporate Affairs has invited comments on the proposal that, if accepted, will become part of the Insolvency and Bankruptcy Code, 2016, according to a statement. A sub-committee that suggested the option has recommended to quickly amend the code, preferably by an ordinance, to implement it. The aim, the proposal says, is to aid the existing insolvency framework and cut the cost and time of the resolution process. While there is no specific statutory definition, a pre-packaged will allow the creditor and the debtor to informally work on a resolution without the involvement of a court or a tribunal. The plan, if the parties agree, can be presented to the adjudicating authority for approval. It's a hybrid of the informal and formal insolvency process and can be applied even before a default. Experts in the past have batted for such a process citing a high caseload at tribunals and time taken to complete insolvency resolution. The proposal comes when fresh bankruptcy filings remain suspended during the pandemic protect firms facing distress because of Covid-19. Read more.