As much as 60 per cent of all resolution plans under Insolvency and Bankruptcy Code (IBC) were approved in the last three years alone, with over 30,000 cases having an underlying default of Rs 13.8 trillion getting settled even before admission, according to data till December 2024 released by the Insolvency and Bankruptcy Board of India (IBBI).
Illustration: Dominic Xavier/Rediff
Out of 1,194 Resolution Plans over the past eight years, 708 resolutions were approved in the past three years.
The insolvency regulator said that this showed the effectiveness of the legal framework in facilitating the revival of insolvent businesses under IBC.
“The Code has delivered impact far beyond the conventional metric of creditor realisation. By establishing a robust legal framework, the IBC has strengthened credit markets, fostered entrepreneurship, and significantly enhanced India’s ease of doing business parameters,”
IBBI chairperson Ravi Mital said in the Board’s latest newsletter.
Mital said while challenges in IBC persist, including process delays and below-expectation recovery rates, the Code’s foundational structure remains sound.
The realisation by creditors remains around 32.8 per cent of admitted claims till March 2025, according to IBBI data.
“As implementation matures and jurisprudence evolves, the IBC is well-positioned to overcome these hurdles and fully realise its transformative potential in India’s financial ecosystem,” the IBBI chairman said.
A study by Indian Institute of Management (IIM), Bangalore, released by IBBI, found a significant reduction in the amount and the number of loan accounts deemed overdue.
The study noted that the average time taken for a loan account to transition from “Overdue” to “Normal” went down from 248-344 days in 2019-2020 to 30-87 days in 2023-2024.
The number of days taken for an account to transition from “Overdue” to “Default” reduced from 169-194 days in 2019-20 to 33-81 days in 2023-24.
“Such findings point towards the success of IBC in reducing the time taken to resolve delinquencies on behalf of creditors and debtors in one way or another, indicative of an efficient credit environment,” the study said.
The study highlighted that there has been around 50 per cent increase in the average employee expenses in the resolved listed firms in the three years post-resolution.
IBBI data showed that more companies are being resolved under the IBC and the number of liquidations is going down.
In 2017-18, for every one company resolved, five would go into liquidation.
As of March 2025, this has improved to nearly 10 companies being resolved against five going to liquidation
