IBC report card: 53% of corporate insolvency processes completed

About 13 percent of corporate insolvency resolution processes (CIRPs) until the end of March 2019 were resolved, while 53 percent cases ended in liquidation, according to data from the Insolvency and Bankruptcy Board of India (IBBI). Average realisation by financial creditors as a share of claims was only 43 percent.

In its report, the IBBI said 359 cases had been admitted for corporate insolvency. Of this, the resolution plan for 14 was approved while 73 went into liquidation in the January-March quarter.

The Insolvency and Bankruptcy Code (IBC) was set up to resolve cases of corporate bankruptcy in a timely manner. However, a third of these cases took more than the stipulated 270 days. For 1,143 ongoing resolution cases, the deadline has already been breached.

Lenders have been forced to sell their stressed exposure to asset reconstruction companies (ARC) due to these delays, and their cash flows have been hit badly. Involved companies, their prospective buyers and creditors want the best deal out of the process, which gets in the way of a timely resolution. Another reason for the delays is different standpoints of the judges of the National Company Law Tribunal (NCLT).