The Insolvency and Bankruptcy Board of India (IBBI) has proposed a new amendment to corporate insolvency regulations aimed at supporting micro, small, and medium enterprises (MSMEs).

“The proposed amendment is expected to reduce information asymmetry in the resolution process for MSMEs,” the IBBI said. “It may also encourage greater participation from potential resolution applicants who may have otherwise been uncertain about their eligibility.”

Under the proposed rule, corporate debtors would be required to disclose their MSME status at the beginning of the resolution process.

It is proposed to amend Regulation 36 of the CIRP Regulations for making disclosures about the status of the corporate debtor, being registered or not, as a micro, small or medium enterprise in accordance with the provisions of the MSME Development Act, 2006, the IBBI said.