Lenders seek to claw back over ₹31,000 cr from bankrupt firms' dodgy deals

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NEW DELHI : New Delhi: The administrators of insolvent companies have approached tribunals to reverse questionable pre-bankruptcy transactions of businesses worth over ₹31,000 crore from 131 cases in the March quarter in an effort to maximise the resources available for restructuring them, official data showed. With this, the number of such voidable transactions flagged before tribunals by debt resolution professionals has gone up to 1,237 at the end of March, estimated at ₹3.7 trillion, up from ₹3.39 trillion at the end of December, according to data from Insolvency and Bankruptcy Board of India (IBBI), the rule maker for the sector.

These dubious deals executed by the businesses during their period of financial distress just before admission for insolvency proceedings by tribunals, include preferential, under-valued, fraudulent and extortionate transactions. The authorities have been encouraging debt resolution professionals to be proactive in moving the tribunals to reverse questionable transactions by the erstwhile management of the sick businesses as any recovery would boost the assets and funds available for restructuring the business.

However, recovery has been somewhat slow given that decisions taken around distressed firms are often bitterly contested by some of the stakeholders. Till the end of March, only ₹6,599 crore, or less than 2% of the amounts flagged by resolution professionals, has been clawed back, raising doubts about inflation of claims and efficiency of recovery.

Of this, ₹280 crore came in the March quarter from 37 petitions disposed of. Experts pointed out that the huge difference between the clawed back amounts and the claimed amounts could indicate improper or inflated claims by the resolution