M-cap of stressed firms zooms three times after IBC resolution, says IBBI chairman

economictimes.indiatimes.com:

IBC) has surged from Rs 2 lakh crore to about Rs 6 lakh crore, the chief of the insolvency regulator said on Sunday, citing an IIM-Ahmedabad study.

Speaking at the seventh annual day event of the Insolvency and Bankruptcy Board of India (IBBI), its chairman Ravi Mittal said the sales of these firms also jumped by 75% after resolution, stressing that the sick companies are doing very well following their resolution.

“This is a very big contribution of the IBC and this has led to growth in the economy,” Mittal said. The study was commissioned by the regulator to gauge the efficacy of the IBC regime.

Mittal said a record 185 cases have been resolved via the IBC in the last fiscal year.

Until August, 135 cases have been resolved and going by this trend, 300 cases could see resolution this fiscal year.

More than Rs 51,000 crore has been realised from the resolution of cases under the IBC in FY23, which was higher than what creditors realised by tapping all other channels, including the SARFAESI Act, Debt Recovery Tribunal and Lok Adalats, Mittal said. He also stressed that the much-hyped delay in the resolution via IBC is still way lower than the time consumed to recover dues through other traditional channels.

The adjudicating authority is now clearing the cases expeditiously, Mittal said, calling on insolvency professionals to rise up to the occasion and help cut delay in resolving stressed assets fast.

Mittal also highlighted the direct and indirect effects of the IBC regime.

It directly facilitated the recovery of more than Rs 3 lakh crore through the resolution of various cases. Indirectly, it has led to a decline in the bad loans in the banking system, which stood at a decadal low of about 3.9% as of March 2023.