As many as 284 resolution plans have been accredited under the Insolvency and Bankruptcy Code (IBC) in 2024-25, which might end result in settlements to the tune of ₹67,176 crore in FY 2024-2025, which is about 42% highest than the ₹47,206 crore resolved by way of 275 resolution plans in 2023-2024, as per the knowledge from National Company Law Tribunal (NCLT).
India enacted the IBC, its first complete bankruptcy law in 2016, to enhance the general company insolvency resolution course of.
The quantity recovered by way of insolvency resolution in FY 2024-2025, is the second highest after ₹1,19,993 crore recovered in FY2018-19 from 81 instances, as per the knowledge.
As many as 1,346 firms have been admitted for the company insolvency resolution course of in 2024-25, compared to 1,318 firms in 2023-2024.
“Higher levels of recoveries generally indicate that the code is generally better compared to other methods for resolution. However, we should also keep in mind that the data can be skewed by a few high value recoveries,” Saurabh Bhalerao, affiliate director, BFSI Research, Care Edge Ratings stated.
Further the quantity has to be thought-about in opposition to the quantum of admitted claims of over ₹11 lakh crore (as of December 2024). This increased resolution will also be attributed to decrease emptiness at the NCLT the place new members have been added boosting its capability in addition to streaming of regulatory processes, he added.
IBC has gained prominence in the previous few years with a restoration charge of round 31%. Meanwhile, ongoing instances have hovered barely under the 2,000-case mark for the previous few years, Mr. Bhalerao stated.
However, the quantum of time required to resolve a case adequately stays elevated due to ongoing litigation at NCLT and different boards. Several measures are being contemplated to protect the enterprise worth of the underlying asset and cut back the timeline (as quicker resolutions sometimes generate increased recoveries), akin to formal out-of-court options akin to Mediation, an extension of the pre-pack resolution mechanism to bigger companies (at present out there for MSMEs), and insolvencies of group firms, he identified.
A measure of the effectiveness of the IBC is the ratio of liquidation to resolution. With a number of initiatives to enhance outcomes, the ratio has improved from 5.06 in FY18 to 1.32 in the 9 months of FY25, Mr. Bhalerao added.
EOM
Published – May 15, 2025 10:11 pm IST
