IBC Turns Corner: Resolution Cases Outpace Liquidations In Big Shift

IBC Turns Corner: Resolution Cases Outpace Liquidations In Big Shift

The Insolvency & Bankruptcy Code is yielding better results, with two cases resolved for every one liquidated, a reversal of the 2017-18 trend.

The findings of India's Insolvency & Bankruptcy Code (IBC) produce strong results; two cases are now resolved for every one that enters liquidation, which is a big change from 2017–18 when five companies entered liquidation for every one that was resolved. The improvement in the quality of assets allowed under the CIRP and the decrease in previous instances related to liquidation are some of the factors driving this shift. Additionally, the government and authorities are working harder to enhance the Code's operation, which includes keeping tabs on resolution procedures and tracking ongoing cases.

Since the IBC was enacted, 30,310 cases involving a default of ₹13.8 lakh crore have been settled before formal admission. Following admission, the IBC has resolved 1,194 cases through resolution plans, while 878 liquidation proceedings have been completed. However, a key concern remains the time taken to complete resolution processes, with cases taking an average of 597 days to resolve, exceeding the 270-day extended deadline.

The Insolvency & Bankruptcy Board of India (IBBI) has revised its process for sharing real-time information on CIRP applications and a separate study has highlighted a clear shift in borrower behavior, with borrowers repaying loans faster and delays in repayments reducing significantly between 2018 and 2024.