Small debt dominates bulk of bankruptcy settlements
NEW DELHI : New Delhi: A majority of the companies defaulting on repayments of small loans, and their creditors, are seeing the wisdom in avoiding long-drawn bankruptcy proceedings and the risk involved, opting to settle their disputes out of court. But when the stakes are high, the parties tend to remain locked in tribunals. About 80% of the out-of-court settlements once bankruptcy proceedings were initiated were for debt up to ₹10 crore, show data from the Insolvency and Bankruptcy Board of India (IBBI).
That’s 845 cases out of a total 1,070 petitions that were withdrawn after being admitted for bankruptcy proceedings between October 2016 and March 2024. In all, 7,567 cases have been admitted in tribunals under India’s Insolvency and Bankruptcy Code (IBC). The smallest of defaults were the ones that got settled most.
More than half of the petitions withdrawn were for dues up to ₹1 crore. A fourth of all settlements were for debt in the range of ₹1 crore to ₹10 crore, the data show. For disputes over dues of ₹1,000 crore or higher, only 1% of the cases were settled out of court after admission of bankruptcy proceedings in tribunals.
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