Creditors realisation stands at over 32.8% till March 2025 under bankruptcy framework: IBBI
Creditors have realised ₹3.89 lakh crore from resolution plans till March 2025, under India's Insolvency and Bankruptcy Code (IBC) enacted in the year 2016.
The realisation is more than 32.8% as against the admitted claims and more than 170.1% as against the liquidation value, insolvency regulator Insolvency & Bankruptcy Board of India (IBBI) said in its January-March 2025 quarterly newsletter.
Resolution plans on average are yielding 93.41% of fair value of the Corporate Debtors (CDs), it said.
More than eight years have passed since the enactment of the IBC in the year 2016. The Code has rescued 1,194 CDs through resolution plans. Further, 1,276 cases have been settled through appeal, review or settlement, and 1,154 cases have been withdrawn under section 12A. The Code has referred 2,758 CDs for liquidation, IBBI said.
Till March, 2025, 1,374 CDs have been completely liquidated with submission of the final report. Out of the 1,374 CDs, 878 have been closed. In the closed liquidations, the creditors have realised ₹9,330 crore, which is nearly 90% realisation as against the liquidation value, as per the data.
As a result of the behavioural change effectuated by IBC, thousands of debtors are settling their dues before the start of insolvency proceedings, IBBI said.
About 30,310 cases having underlying default worth ₹13.78 lakh crore have been settled pre-admission. Post admission, the IBC has resolved 1194 cases through resolution plans, 2,430 cases have been closed through settlement, withdrawals and appeal, and 878 liquidations have closed, it said.
In 2017-18, for every 1 CD resolved, 5 CDs would go into liquidation. Steadily, this ratio has now improved to nearly 10 CDs being resolved against 5 CDs going to liquidation, IBBI said.
Last 3 years have witnessed an unprecedented surge in the approval of resolution plans under the IBC. In 2024-25, 259 resolution plans were approved, 263 were approved in 2023-24 and 186 plans were approved in 2022-2023.
'While challenges persist, including process delays and recovery rates below expectations, the Code's foundational structure remains sound. As implementation matures and jurisprudence evolves, the IBC is well-positioned to overcome these hurdles and fully realize its transformative potential in India's financial ecosystem,' IBBI Chairman Ravi Mital said in the newsletter.
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
The Hindu
2 hours ago
- The Hindu
Is IBC an effective resolution tool?
The story so far: More than eight years have passed since the enactment of India's Insolvency and Bankruptcy Code (IBC). According to data from the Insolvency and Bankruptcy Board of India (IBBI), creditors have realised ₹3.89 lakh crore under the framework, with a recovery rate of over 32.8% against admitted claims. Why was the IBC enacted? India enacted the IBC, its first comprehensive bankruptcy law, in 2016 to improve the overall corporate insolvency resolution process. Shifting control from debtors to creditors, the IBC introduced a time-bound resolution mechanism to streamline bankruptcy proceedings, reduce judicial delays, and improve creditor recoveries. According to current provisions, a maximum timeline of 330 days is allowed to find a resolution for a company admitted into the insolvency resolution process. Otherwise, the company goes into liquidation. So far, the Code has rescued 1,194 companies through resolution plans. Is IBC a preferred route for debt recovery? As per the Reserve Bank of India report on Trend and Progress of Banking in India released in December 2024, the IBC emerged as the dominant recovery route, accounting for 48% of all recoveries made by banks followed by the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest (SARFAESI) Act (32%), Debt Recovery Tribunals (17%), and Lok Adalats (3%) in the Financial Year 2023-24. The realisation under IBC is more than 170.1% as against the liquidation value. Resolution plans, on average, are yielding 93.41% of the fair value of the Corporate Debtors (CDs), IBBI said. Further, 1,276 cases have been settled through appeal, review, or settlement, and 1,154 cases have been withdrawn under section 12A. The Code has referred 2,758 companies for liquidation, as per IBBI data. Nearly 10 companies are being resolved against five going into liquidation. Has IBC been an effective recovery mechanism? Akshat Khetan, Founder, AU Corporate Advisory and Legal Services, pointed out that IBC has changed the underlying credit culture. As the Supreme Court once observed, 'the defaulter's paradise is lost' and the Code has created a credible threat that ensures timely repayment. On the recovery rate of 32.8%, Mr. Khetan pointed out that it must be interpreted in light of the distressed nature of the assets that come into the IBC process, often after years of erosion. As the National Company Law Appellate Tribunal has rightly remarked in one of its rulings, 'IBC is not a recovery mechanism; it is a resolution framework.' Compared to legacy systems, where recovery rates were often below 20% with timelines extending into decades, a 32.8% realisation is a leap forward, he said. Mr. Khetan also stated that the statistic does not capture qualitative gains, such as job preservation, improved enterprise value, and restored investor confidence. In a framework designed to balance resolution over liquidation, the broader economic impact of IBC far outweighs numerical recovery alone, he said. The provisions of the IBC have prompted debtors to take early action in distress situations, marking a shift in their behaviour. National Company Law Tribunal (NCLT) data show that 30,310 cases were settled prior to admission, covering underlying defaults worth ₹13.78 lakh crore till December 2024. A study by the Indian Institute of Management, Bangalore, submitted to IBBI, said IBC has injected discipline in the credit allocation process and has prompted borrowers to adhere to stipulated payment schedules. The gross non-performing assets of the scheduled commercial banks have declined from a peak of 11.2% in March 2018 to 2.8% in March 2024. A part of that reduction is attributable to resolution processes enabled under IBC, it said. The study also indicated a 3% reduction in the cost of debt for distressed firms post-IBC, compared to non-distressed firms , indicating an improved credit environment for distressed firms. The IBC has had a positive impact on corporate governance, reflected in the increased proportion of independent directors on the boards of companies resolved under the Code. What are the major challenges? In a recent report, India Ratings and Research said that judicial delays and post-resolution uncertainties continue to affect confidence in the IBC framework. Even when resolution applicants are ready and the Committee of Creditors has granted approval, delays at the NCLT continue to push recovery timelines. In several cases, such delays result in extended litigation or failed implementation, increasing the risk of liquidation for a viable asset that requires timely execution, it said. The future insolvencies also raise questions about the Code's readiness to handle non-traditional enterprise defaults. While the IBC is legally broad enough to accommodate various resolution strategies, key commercial elements such as intellectual property valuation, treatment of employee dues, and tech continuity require a clearer treatment under the framework to make it future-ready, India Ratings said. To enhance its effectiveness, India must invest in strengthening tribunal infrastructure, allow for pre-packaged insolvency, and establish jurisprudential guardrails to protect bona fide commercial decisions from post-resolution uncertainty, Mr. Khetan said. While challenges persist, including process delays and recovery rates below expectations, the Code's foundational structure remains sound. As implementation matures and jurisprudence evolves, the IBC is well-positioned to overcome these hurdles and fully realise its transformative potential in India's financial ecosystem, IBBI Chairman Ravi Mital said in the recent quarterly newsletter. Does the SC verdict on Bhushan Steel pose a challenge to IBC? The recent developments in the Bhushan Power and Steel Ltd. case have reignited concerns around the finality of resolution outcomes and the predictability of the framework. While the decision upholds compliance standards, its timing and implications highlight the need for judicial clarity and faster adjudication to sustain investor confidence in the process in the long term, India Ratings said. By questioning a transaction that had been closed and operational for years, it risks unsettling the core principle of commercial certainty. If resolution applicants fear judicial reversals even after significant investment, they may hesitate to bid, undermining the IBC's very purpose. The Bhushan verdict thus underscores the need for legal sanctity once a resolution plan is approved and implemented, Mr. Khetan said. The IBC is not merely a piece of economic legislation, it is the backbone of India's credit ecosystem. Its future lies in striking a fine balance between judicial oversight and economic pragmatism. As India aspires to become a $5 trillion economy, robust and predictable insolvency mechanisms are indispensable. The Code must remain nimble, continually evolving to meet emerging realities while ensuring that commercial wisdom is not second-guessed endlessly, he said. Almost 78% of the ongoing Corporate Insolvency Resolution Process (CIRP) cases have exceeded 270 days, post-admission by the NCLT, as on March 31, 2025, ratings agency ICRA said. A sustained momentum would be needed to minimise haircuts for lenders, which remain high at 67%, it said. Nevertheless, some of the recent judgments reinforce the need for timely and transparent resolution, thereby putting greater onus on the Committee of Creditors (CoC) and NCLT. However, such rulings may also impact investor confidence in stressed assets setting precedents that the decision made by the CoC and the NCLT may be challenged and overturned by the judicial system, thus impacting the effectiveness of the resolution process, ICRA said.
&w=3840&q=100)
Business Standard
3 hours ago
- Business Standard
Central Bank of India acquires 24.91% stake in FGIICL for ₹451 crore
The bank's strategic acquisition of 350.63 million shares in Future Generali India Insurance marks its entry into the general insurance sector New Delhi Central Bank of India has acquired a 24.91 per cent equity stake in Future Generali India Insurance Company Limited (FGIICL) for ₹451 crore. The acquisition involves the purchase of 350.63 million equity shares in cash and was completed on June 4. The move follows the issuance of a Letter of Intent dated August 20, 2024, under Regulation 29 of the Insolvency Resolution Process for Corporate Persons (IBBI) Regulations, 2016. The transaction was finalised after receiving all requisite regulatory approvals from the Competition Commission of India (CCI), Reserve Bank of India (RBI), and the Insurance Regulatory and Development Authority of India (Irdai). FGIICL performance and ownership This strategic acquisition marks Central Bank of India's entry into the general insurance sector. FGIICL reported a gross direct premium of ₹4,910.89 crore in the financial year 2023–24, providing the bank with a significant platform for expansion. Future Generali India Insurance, incorporated in 2006 and headquartered in Mumbai, operates over 150 offices nationwide. It is engaged in providing general insurance services across retail, commercial, personal, and rural segments to both individuals and corporate clients. Generali currently holds a 74 per cent stake in the company. Steady premium growth Over the past three financial years, FGIICL has posted consistent growth in its gross written premium. In FY24, the figure reached ₹4,910.89 crore, an 8 per cent rise from ₹4,546.23 crore in FY23. The previous year had also seen similar growth, increasing from ₹4,210.35 crore in FY22. This represents a steady annual growth of around 8 per cent for two consecutive years. As of 2022, the company served over 3,900 corporate clients through a network of more than 36,800 individual agents and operated over 150 branches across India. The disclosure was made in accordance with Regulation 30 of the Sebi (Listing Obligations and Disclosure Requirements) Regulations, 2015.
India.com
a day ago
- India.com
Anil Ambani wins big as NCLAT suspends insolvency order against Reliance Infra after...
Anil Ambani (File) In a major relief for Anil Ambani, the National Company Law Appellate Tribunal (NCLAT) Wednesday suspended an order issued by National Company Law Tribunal (NCLT) to admit Reliance Infrastructure into the Corporate Insolvency Resolution Process (CIRP). 'In the appeal filed, the Hon'ble National Company Law Appellate Tribunal, New Delhi (NCLAT), today has suspended the Order dated May 30, 2025 passed by National Company Law Tribunal, Mumbai in case no. C.P. (IB)/624(MB)2022, admitting the Company into Corporate Insolvency Resolution Process,' the Reliance Group company revealed in its regulatory filing. NCLT admits Reliance Infra under CIRP Earlier, acting on a plea filed by IDBI Trusteeship Services Ltd, the NCLT had admitted Reliance Infra under CIRP. The plea stemmed from a dispute over a 2011 Energy Purchase Agreement (EPA) between Reliance Infrastructure and Dhursar Solar Power Pvt Ltd (DSPPL), under which the Anil Ambani-led company had committed to purchase all power generated by DSPPL's solar power plant. In 2012, DSPPL signed a direct agreement with IDBI Trusteeship Services Ltd, designating it as as the holder of DSPPL's claims. DSPPL energy to Reliance Infra between 2017 and 2018, and sent ten invoices to the company. However, after Anil Ambani's fir was unable to pay the dues, IDBI Trusteeship, under the Insolvency and Bankruptcy Code (IBC), issued a demand notice in April 2022, seeking more than Rs 88 crore in unpaid dues. IDBI Trusteeship filed a plea with the NCLT against Reliance Infra, and on May 30, a division bench of judicial member KR Saji Kumar and technical member Sanjiv Dutt said admitted the Anil Ambani-promoted company into CIRP. 'We come to a definite conclusion that the operational creditor (IDBI Trusteeship) has become successful in establishing operational debt due and payable against the CD (corporate debtor) and that the CD (Reliance Infrastructure) is in default,' the NCLT bench said in its order. Meanwhile, Reliance Infrastructure stated that it has already paid the dues in full to DSPPL, and asserts that the plea was time-barred as the invoice dates back to September 2018, adding that the petition was non-maintainable due to its pre-existing dispute with DSPPL.
