Recovery via IBC eases to 26% in December quarter
Creditors’ recovery from defaulters under the Insolvency and Bankruptcy Code (IBC) dropped to almost 26% of their admitted claims in the December quarter from 33% in the previous three months, showed the latest data compiled by the insolvency regulator.
The realisation in the December quarter—Rs 4,281 crore from 79 firms—seems to have been hit by long delays in resolution. About two dozen of these rescued firms saw the resolution processes stretching beyond four years, well beyond the stipulated time frame of 270 days, suggesting erosion of the stressed asset value.
The recovery, however, was 74.7% of the fair value of the stressed companies when they were admitted for resolution and 128.6% of the liquidation value of these companies, according to the Insolvency and Bankruptcy Board of India data.
The cumulative recovery since the insolvency regime came into force in late 2016 stood at Rs 3.21 lakh crore, or 31.9% of the claims that were admitted by the adjudicating authority relating to the 891 stressed firms.
To be sure, the cumulative proceeds were 86.6% of the fair value of the rescued companies (when the IBC was invoked), based on the proceeds involving 783 resolved cases. The realisation in all the resolved cases was 168.6% of the liquidation value of the firms.
Experts, however, have advised against judging the IBC’s performance based on the recovery rate for any one quarter, arguing that the law is still the best tool for bad debt resolution. The recovery rate under the IBC is way above that through
