NEW DELHI: Even as the nationwide lockdown meant businesses and credit flow took a hard knock, the number of cases admitted under the Insolvency & Bankruptcy Code (IBC) has actually contracted, thanks to the year-long suspension of fresh bankruptcy proceedings.
The latest data put out by the Insolvency and Bankruptcy Board of India (IBBI) shows that only 161 cases were admitted under the insolvency resolution process during the first half of the ongoing financial year. This compares to 889 cases admitted during the same period last year—a decline of almost 81.8 per cent. In the preceding March quarter, as many as 441 cases were admitted, compared to just 81 new cases in the June quarter and 80 in the September quarter.
For the first six months of FY21, 17 cases have been closed on appeal/review, while only 42 have seen the approval of a resolution plan. ICRA estimates that realisations for financial creditors remain low at around Rs 60,000-65,000 crore in FY21 through successful resolution plans from the IBC.
The number of cases admitted for the Corporate Insolvency Resolution Processes (CIRPs) over the last 13 quarters had increased significantly, and has been generally increasing every quarter, with a major portion of these cases being admitted over the last eight quarters. Over 45 per cent of the total number of insolvency cases were admitted after the first quarter of FY20.
A sector-wise split of cases shows that over 40 per cent of the ongoing cases in the second quarter were from the manufacturing space, while 30 per cent were real estate and construction-related. Analysts at Kotak Institutional Equities say that the high number of cases “reflects the pivotal role played by this body... Of the total admitted cases, 50 per cent were initiated by operational creditors and 43 per cent by financial creditors”.