Insolvency Resolution Timeline Shows Improvement

NEW DELHI: The timeframe for finalizing insolvency resolution plans has seen a notable decrease, dropping from 752 days at the end of the March quarter to 694 days by June's end. Despite this progress, the duration remains well above the prescribed 180 days, extendable by another 90.

Challenges in the Resolution Process

According to the Insolvency and Bankruptcy Board of India, a staggering 78% of resolution plans exceed the 270-day mark, highlighting significant delays. Litigation across various forums and the National Company Law Tribunal's limited capacity are major contributors to these setbacks.

Recent Developments and Amendments

Finance Minister Nirmala Sitharaman has proposed amendments to the Insolvency & Bankruptcy Code (IBC) to enhance the resolution process's speed and effectiveness. Official data reveals that admitting cases alone takes over 400 days, far exceeding the legal provision of 14 days.

The Impact of IBC

Despite delays, the IBC remains a powerful tool for creditors, ensuring defaulters either settle their dues or forfeit control of their companies. The June quarter marked a shift, with financial creditors initiating more cases than operational creditors for the first time.

Operational creditors, particularly suppliers, have found the IBC effective for recovering dues, with over half of their cases closed upon appeal or withdrawal. Resolved cases have led to the realization of 32.5% of admitted claims, slightly higher for large cases exceeding Rs 1,000 crore.