Overview of Insolvency and Bankruptcy Code (IBC) Resolutions
The Insolvency and Bankruptcy Board of India (IBBI) has reported significant progress in the resolution of insolvency cases under the Insolvency and Bankruptcy Code (IBC), particularly in the last three years. Data up to December 2024 indicates substantial achievements in settling insolvency cases before formal admission.
Key Statistics
- 60% of all resolution plans under IBC were approved in the last three years.
- Over 30,000 cases were settled before admission, involving defaults worth ₹13.8 trillion.
- Out of 1,194 resolution plans in the past eight years, 708 were approved in the last three years alone.
Impact of IBC
According to the IBBI, the IBC has had a broad impact beyond creditor realization by strengthening credit markets, fostering entrepreneurship, and enhancing ease of doing business in India.
Challenges and Future Prospects
- Challenges include process delays and below-expectation recovery rates, with creditor realization around 32.8% of admitted claims by March 2025.
- The IBC is expected to overcome these hurdles as implementation matures and jurisprudence evolves.
Study Findings by IIM Bangalore
- Significant reduction in the amount and number of overdue loan accounts.
- Transition time from "Overdue" to "Normal" decreased from 248-344 days in 2019-2020 to 30-87 days in 2023-2024.
- Transition time from "Overdue" to "Default" reduced from 169-194 days in 2019-20 to 33-81 days in 2023-24.
- Average employee expenses in resolved firms increased by around 50% in the three years post-resolution.
Trends in Resolution and Liquidation
The number of companies being resolved under the IBC is increasing, while liquidations are decreasing. In 2017-18, for every one company resolved, five would go into liquidation. As of March 2025, nearly 10 companies are being resolved for every five going into liquidation.
