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Informist, Tuesday, May 20, 2025

 

NEW DELHI – The Insolvency and Bankruptcy Board of India, in its quarterly newsletter, said that out of 1,194 corporate insolvency resolution plans since the roll out of Insolvency and Bankruptcy Code, 2016, around 60% of those resolutions were done in the last three years. 

 

According to the insolvency board, more and more companies were being resolved under the 2016 code and the number of liquidations were going down. This is reflected in the improved ratio of number of cases ending with resolution against cases in which liquidation is ordered as shown, said the board. In 2017-18 (Apr-Mar), for every one corporate debtor resolved, five corporate debtors would go into liquidation, said the board. Steadily, this ratio has now improved to nearly 10 corporate debtors being resolved against five corporate debtors going into liquidation, the board added.

 

The newsletter said the 2016 code has rescued 1,194 corporate debtors through corporate insolvency resolution plans. Further, 1,276 cases have been settled through appeal or review or settlement and 1,154 cases have been withdrawn under section 12A of the 2016 code. The code has also referred 2,758 corporate debtors for liquidation, said the newsletter.

 

Creditors had realised INR 3.89 trillion under the resolution plans till March, said the board. This realisation is more than 32.8% as against the admitted claims and more than 170.1% as against the liquidation value, said the board. Resolution plans on average are yielding 93.41% of fair value of the corporate debtors, the board added.

 

Highlighting the overall impact of the 2016 code, the board said that as a result of the behavioural change effected by the insolvency law, thousands of debtors are settling their dues before start of insolvency proceedings. About 30,310 cases having underlying default worth INR 13.78 trillion have been settled pre-admission. Post admission, the 2016 code has resolved 1,194 cases through resolution plans, 2,430 cases have been closed through settlement, withdrawals and appeal, and 878 liquidations have closed, said the board.

 

The board's chairperson Ravi Mittal said the 2016 code has delivered the impact far beyond the conventional metric of creditor realisation. By establishing a robust legal framework, the 2016 code strengthened credit markets, fostered entrepreneurship, and significantly enhanced India's ease of doing business parameters, said Mittal. These improvements have created a more conducive environment for investment, ultimately driving economic growth and development, he added.

 

While challenges persist, including process delays and recovery rates below expectations, the code's foundational structure remains sound, said Mittal. As implementation matures and jurisprudence evolves, the 2016 code is well-positioned to overcome these hurdles and fully realise its transformative potential in India's financial ecosystem, Mittal added.  End

 

Reported by Surya Tripathi

Edited by Akul Nishant Akhoury

 

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