"It has offered fresh impetus to the recovery segment of the financial markets and the reconstruction of failed/distressed assets in the real sector," it said. In the eight years since 2016, as many as 31,394 corporate debtors involving a value of Rs 13.9 trillion have been disposed of (including pre-admission case disposals) as of March 2024, the survey mentioned. The loss of control immediately after admission into the resolution process has led debtors to settle with creditors as soon as the applications are filed with the National Company Law Tribunal (NCLT). “A singularly notable fact is that Rs 10.2 trillion of underlying defaults were addressed at the pre-admission stage,” the survey said. The IBC provides for addressing financial distress early in time. It mandates the insolvency professional to conduct the insolvency process and run the operations of the distressed corporate debtor. At the same time, the committee of creditors steers the resolution process and all significant decisions, thus reducing further erosion of value during the process itself, noted the survey.
Till March 2024, the Code has facilitated the successful closure of 4,131 corporate insolvency resolution processes (CIRPs). As many as 3,171 corporate debtors have been rescued, of which 947 cases have been resolved through approved resolution plans, which brought in a realisable value of Rs 3.36 trillion. In the resolved cases, the creditors recovered approximately 32% of their claims. This amounted to a recovery of 85% of the fair value and 162% of the liquidation value of assets. Moreover, as of March 2024, the total CIRPs ending in liquidation were 2,476. Around 77% of these corporate debtors were defunct at the beginning of the process and were, on average, valued at 7% of the outstanding debt, the survey said. It also said that the impact of IBC on the health of the financial markets is evident as it is the dominant recovery route for scheduled commercial banks (SCBs) today. As per an RBI report, the IBC held a share of 43% of the total amount recovered by SCBs in FY23. In the six years since FY18, the IBC has enabled over Rs 3 trillion recovery for the SCBs, more than what they have recovered through the Lok Adalats, DRTs, and the SARFAESI Act. The Government has taken several measures to improve the insolvency ecosystem. It has strengthened the NCLT regarding infrastructure, increasing its strength by filling vacancies and proposing an integrated IT platform. “The IBC has established itself as an indispensable component of the asset recovery and reconstruction market. In the process, it has forever changed the credit market landscape in the country for good,” the survey said.
