Resolutions under insolvency law likely to touch 300 this year: IBBI chief

While acknowledging that the IBC has issues related to delays and haircuts, among other things, Mital said the Insolvency and Bankruptcy Board of India (IBBI) did an analysis which showed that the IBC is for resolutions but it is being evaluated on the basis of performance or haircuts.

Corporate Affairs Secretary Manoj Govil Sunday said the number of resolutions of stressed assets under insolvency norms is likely to touch 300 this financial year, after rising 80% in the last fiscal, and efforts are on to speed up the process for faster resolutions

The market capitalization of stressed companies resolved under India's Insolvency and Bankruptcy Code (IBC) has increased from INR 2 lakh crore to around INR 6 lakh crore, according to the chairman of the Insolvency and Bankruptcy Board of India (IBBI), Ravi Mittal. Sales of these companies also rose by 75% after resolution, indicating their improved performance. Mittal highlighted that a record 185 cases were resolved through the IBC in the last fiscal year, and more than INR 51,000 crore has been realized from these resolutions.

IBBI had in 2022 permitted firms to take up the mandate of administering businesses going through the bankruptcy process in place of individual professionals, given that an organization will have more internal controls and governance systems.

Stressed asset resolutions under the Insolvency and Bankruptcy Code faced delays due to staff shortages at the National Company Law Tribunal (NCLT) and appellate tribunal. Aviation players, including Go First, sought insolvency protection with limited success. By September, creditors had realized Rs 3.16 lakh crore through IBC resolutions since 2016.

Data available from IBBI showed that from 2016 (when IBC became operational) to December 2023, bankruptcy resolution plans were approved for 891 companies

Speaking at the seventh foundation day of the Insolvency and Bankruptcy Board of India, the rule maker and regulator, ministry of corporate affairs secretary, Manoj Govil, said the pace of debt resolution under IBC was steadily increasing.

The details will be finalised after broader stakeholder consultations. The government has studied the best practices of several jurisdictions and a similar, if not the same, insolvency mechanism is followed in the UK, said an official aware of details. Various aspects and structures of the planned framework are being examined and a final decision would be taken in due course.

In a first for the country's bankruptcy resolution regime, the insolvency regulator has prepared a common panel of 400 insolvency professionals (IPs) from those registered with it. The Insolvency and Bankruptcy Board of India (IBBI) will share the list with the adjudicating authority to choose from to oversee cases of resolution or liquidation from July 1, according to an official.

The Indian government may permit the partial sale of a stressed company only if it fails to attract a buyer for the entire entity under the Insolvency and Bankruptcy Code (IBC), in an effort to reduce delay in resolution and prevent the decay of stressed asset value. The ministry of corporate affairs suggested changes to the IBC that would provide a provision to allow multiple resolution plans for various parts of an insolvent firm to maximise value realisation.