‘More than 30K cases settled pre-admission; covering defaults worth Rs 13.78L cr’

Kolkata: More than 30,000 cases were settled prior to admission, covering underlying defaults worth Rs 13.78 lakh crore till December 2024, under the Insolvency & Bankruptcy Code (IBC) Credit Discipline.

Jithesh John, Executive Director, Insolvency and Bankruptcy Board of India (IBBI) asserted that the RBI’s Trend and Progress of Banking in India for the year 2023-24 report highlights that out of the Rs 96,000 crore recovered by scheduled commercial banks through various channels, Rs 46,000 crore have been recovered through IBC thereby underscoring its significance.

Speaking at the 8th Annual Conference on IBC Conclave, organised by CII Eastern Region at Kolkata, he stated that a total of 1194 Corporate Insolvency Resolution Process (CIRPs) have ended in resolution with different degrees of recovery till March 2025.

The creditors have realised Rs 3.89 lakh crore under the resolution plans. While this may be about 32 per cent of the claims, the creditors have recovered around 170.02 per cent of the liquidation value and around 93.36 per cent of the fair value. He said that it is interesting to note that about 40 per cent of the CIRPs, which yielded resolution plans, were defunct companies that were not going concerns.

“This is the real success of the IBC Code that even defunct companies have been made operational through this process leading to job creation in the market. In these cases, the claimants have realised 150.33 percent of liquidation value and 18.96 per cent of their admitted claims,” he added.

John further highlighted that in a comprehensive research study conducted by the Indian Institute of Management Ahmedabad (IIMA) to assess the effectiveness of the resolution process under IBC in India, creditors have, on average, realised 32 per cent of admitted claims and 168 per cent of liquidation value in cases resolved. Average total assets of resolved firms increased by about 50 per cent post-resolution, coupled with a 130 percent increase in CAPEX, indicating a build-up of tangible assets. The aggregate market valuation of all resolved firms increased from around Rs 2 lakh crore to Rs 6 lakh crore post-resolution. Liquidity improved by about 80 per cent in the post-resolution period. The current assets to current liabilities ratio improved from 1.01 in the year of bankruptcy to 1.83 in the third-year post-resolution.