Insolvency resolution high for manufacturing sector, lags for real estate
real estate. Together, the two industries account for three out of five insolvency cases admitted in India but have thus far yielded vastly contrasting outcomes.
Manufacturing made up 38% of all such cases admitted until September 2023 since the Insolvency and Bankruptcy Code (IBC) came into force late 2016, but its share in the resolved cases was as much as 48%.
Real estate, meanwhile, accounted for 21% of the admitted cases but only 15% of the resolved ones, according to the latest Insolvency and Bankruptcy Board of India (IBBI) data.
Experts said while both the sectors are «asset-heavy», greater investor demand for manufacturing is the key differentiator in resolutions. Moreover, given the involvement of large numbers of homebuyers, who have been accorded the financial creditor status under the IBC, the resolution of insolvent real estate firms has turned out to be both complex and lengthy, they said.
Several real estate developers, including Jaypee, Unitech, Amrapali, Today Homes, Supertech, Logix and Ajnara, are facing insolvency proceedings.
Interestingly, the share of construction in admitted and resolved cases stood at 12% and 11%, respectively.
Among other key sectors, wholesale and retail trade accounted for 10% of the insolvency cases admitted up to September 2023, followed by transport and electricity (3% each) and hotels (2%). In resolved cases, the share of wholesale and retail trade was 7%, followed by electricity (5%), hotels and transport (2% each).
The data showed, as of September 2023, as many as 7,058 insolvency cases were admitted by the National Company Law Tribunal (NCLT), of which 808 saw resolution.
