New Delhi, Dec. 13 -- The Insolvency and Bankruptcy Board of India (IBBI) is examining the possibility of reviewing the liquidation waterfall mechanism under the Insolvency and Bankruptcy Code (IBC), 2016, to explore whether micro, small and medium enterprises (MSMEs) should be accorded higher priority in the distribution of proceeds.

"The idea to prioritise MSME dues under IBC has been around for quite some time but the government is finally moving forward with a study that will make for a stronger case to classify MSME dues at par with secured creditors," said an official, according to FE. However, no timeline has yet been fixed for completing the study, the official added.

Current Legal Framework

Under Section 53 of the IBC, MSMEs f...