Only 17% had adopted a resolution plan, the remaining cases were withdrawn after the adoption by the National Company Law Tribunal (NCLT) on March 31, and the resolution of 960 corporate debtors was completed with creditors realizing only 4% of their total admitted claims under Insolvency and Bankruptcy Code (IBC), ICRA said in a study.
The NCLT has approved a record 269 resolution plans under the IBC in FY24, surpassing the FY23 record of 189 cases, but the augment in the average duration of the resolution process has raised concerns, ICRA said.
Creditors’ claims of Rs 1.7 lakh crore were resolved by approval of resolution plan in FY24 compared to Rs 1.5 lakh crore in FY23 and haircut by lenders increased to 73% from 64%. added.
The average duration of the corporate insolvency resolution process (CIRP) has increased to 843 days in FY24. ICRA says the number of CIRPs closed through liquidation orders continues to outpace the number of CIRPs for which a resolution plan has been issued.
Abhishek Dafria, Group Head, Structured Finance Ratings at ICRA,said: “We continue to come across creditors approaching the NCLT seeking admission of defaulting debtors with significant delays, resulting in significant asset erosion. Moreover, there is sedate difficulty in timely closure of CIRP due to litigation by promoters or dissenting creditors as well as overburdened NCLT benches.
Apart from CIRP schemes, NCLT has also issued winding-up orders for 446 corporate debtors in FY24 against 400 corporate debtors in FY23. ICRA says the number of CIRPs resulting in liquidation is still significantly high at 45% of the 5,467 CIRPs closed. since the establishment of IBC.
