NEW DELHI: The Insolvency and Bankruptcy Code (IBC) has resolved 891 cases of defaults involving banks loans worth R10 lakh crore till December 2023. The resolution of these cases led to the recovery of R 3.2 lakh crore, or 32% of the total admitted claims by banks and financial institutions. During the same time 2,376 defaulting companies were ordered to be liquidated.
Under IBC, resolution means acquisition of an insolvent company by another as a going concern. In case when, the resolution process fails to find a buyer for the company it is liquidated where assets of the company are sold to recover money by the creditors.
While the recovery rate under IBC is poor when compared to the total admitted claims of the banks, experts have pointed out that the new insolvency regime has instilled fear among willful defaulters, resulting in thousands of cases being resolved even before reaching the NCLT. According to IBBI’s (Insolvency and Bankruptcy Board of India) quarterly report, 27,500 applications for initiation of corporate insolvency resolution process against companies involving defaults of R9.74 lakh crore were withdrawn before admission.
As many as 79 corporate insolvency cases were resolved in the December quarter with creditors recovering 26% of the total admitted claims. The 79 cases that saw resolution during the quarter involved R16,517 crore of default, out of which the lenders could recover R4,300 crore. The total fair value of these companies was R5,735 crore, while the liquidation value of these companies was R3,330 crore.
The large cases that saw resolution during the quarter include Mittal Corp (involving R1,767 crore default) and AMW Autocomponent (R1,663 crore). Mittal Corp was acquired by Shyam Sel and Power Limited, which offered R350 crore to the creditors of the company.
79 cases in Q3
As many as 79 corporate insolvency cases were resolved in the December quarter with creditors recovering 26% of the total admitted claims, according to the quarterly report.