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Informist, Thursday, Mar. 19, 2026

 

NEW DELHI – The aggregate market valuation of companies resolved under the Insolvency and Bankruptcy Code has increased from around INR 2.8 trillion to INR 9 trillion in five years post-resolution, according to a study by the Indian Institute of Management Ahmedabad on the effectiveness of the resolution process. The market capitalisation trends of listed resolved firms indicate a significant recovery in market valuations during the post-resolution period, reflecting improved investor confidence and growth prospects following successful resolution with creditors, the study said.

 

The data indicate a notable post-resolution increase in capital expenditure, the study said, adding that average capital expenditure has risen by approximately 106% over five years following resolution. This reflects renewed investment activity and improved economic viability for the firms, the study said.

 

According to the study, the resolved firms demonstrate a marked improvement in asset utilisation. The asset turnover ratio has increased by about 131% over five years since the resolution, suggesting enhanced operational efficiency. Further, the study observed an increasing trend in the average asset base of the resolved firms. Average assets of resolved companies have grown from INR 2.28 billion in the resolution year to INR 2.55 billion in the fifth-year post-resolution, representing an increase of approximately 11.5%, the study said.

 

Average sales of the resolved firms have shown a substantial improvement, the study said. The average sales of resolved companies have increased by 89% in the five years post-resolution, indicating a significant revival in business operations, the study said. The study said liquidity has also improved considerably in the post-resolution period, adding that it has increased by approximately 106% over the five-year period following resolution. The trend reflects a significant strengthening of the financial position and short-term solvency of the resolved firms, the study said.

 

The average employee expenses have increased by around 71.9% for the firms which have completed five years of resolution, indicating greater employment intensity and a possible expansion in workforce-related expenditure during the post-resolution phase, the study said. In the post-resolution period, the average employee strength per unit of total assets has increased by approximately 200% over five years, it added.

 

The study's findings highlight the effectiveness of the resolution process in restoring the financial and operational health of distressed firms, the report said. These trends demonstrate that the resolution mechanism under the Insolvency and Bankruptcy Code, 2016, supports business recovery, encourages renewed investment, and contributes to broader economic value creation in the post-resolution phase, the report said.  End

 

Reported by Surya Tripathi

Edited by Saji George Titus

 

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