NEW DELHI: Banks and financial institutions have taken a hefty haircut of as much as 70% in 612 corporate insolvency resolution cases, which ended in resolution till December 31, 2022, according to the quarterly newsletter of the Insolvency and Bankruptcy Board of India (IBBI).
Of the total admitted claims of Rs 8.3 lakh crore under Insolvency and Bankruptcy Code (IBC), creditors have realised Rs 2.5 lakh crore under the resolution plans. This works out as 30% recovery rate. However, the insolvency regulator says recovery through IBC is better than that through other means.
“Any other option of recovery or liquidation would have recovered at best Rs 100 minus the cost of recovery/liquidation, while the creditors recovered Rs 176 under the code. The excess recovery of Rs 76 is a bonus from the code.
Though recovery is incidental under the Code, the financial creditors recovered 32.59% of their claims, which only reflects the extent of value erosion by the time the corporate debtors entered CIRP, yet it is the highest among all options available to creditors for recovery,” the regulator said in its quarterly newsletter.
The government had introduced corporate insolvency resolution process (CIRP) on December 1, 2016. A total of 6199 CIRPs have commenced by the end of December 2022, of these, 4199 have been closed, according to the government data.
Of the CIRPs closed, the corporate debtor was rescued in 2,298 cases, of which 894 have been closed on appeal or review or settled; 793 have been withdrawn; and 611 cases have ended in approval of resolution plans; while 1901 have ended in orders for liquidation.
Recovery under IBC
Admitted claims : 8.3 Rs lakh cr
Realisable Value : 2.53 Rs lakh cr
Recovery %: 30%