For creditors moving bankruptcy courts, 2023 was a great year

livemint.com:

₹67,000 crore in calendar year 2023, a 221% jump from the year before. In 2022, creditors had realized about ₹20,860 crore by initiating bankruptcy action under IBC, a senior government official said.

The recovery includes both repayment of debt after turning around a distressed company as well as liquidation proceeds. The sharp improvement in realizations comes from a jump in the number of cases resolved by National Company Law Tribunal (NCLT) benches under IBC in 2023.

In the just-concluded calendar year, creditors managed to pull off debt resolution in 273 cases, the highest in a year since the debut of IBC in 2016, against 160 in 2022, the official cited above said on the condition of anonymity. This shows a robust upward trajectory in the effectiveness of the bankruptcy code, the official said.

So far, NCLT benches have approved debt resolution in 887 cases under the bankruptcy code, unlocking over ₹3.19 trillion in realizable value. While the average realization against claims of creditors admitted by the administrator of the company hired by lenders is at 32%, the realization is about 168% of the liquidation value, or the amount that can be realized by selling the assets, a more realistic, market-linked and appropriate estimate of the asset value.

Besides, the share of large borrowers in the gross non-performing assets (NPAs) in the banking sector has been steadily declining since IBC came into force in 2016, indicating that large corporations are turning more disciplined in repaying dues, said the official. The figures point to improving effectiveness in dealing with industrial sickness, even as policymakers expect the improved balance sheets of both lenders and corporations to trigger a fresh investment cycle.