Recovery from defaulters under the insolvency law rose to 31.12% of the creditors’ claims in the June quarter from 25% in the previous three months, showed the data released by the bankruptcy regulator.
However, it’s marginally lower than the longer-term recovery rate of 32.06% since the Insolvency and Bankruptcy Code (IBC) was introduced in late 2016.
In absolute terms, the realisation for creditors from the resolution of 58 stressed firms during the June quarter touched Rs 3,935 crore, according to the Insolvency and Bankruptcy Board of India (IBBI) data. The cumulative recovery from the 1,005 resolved cases until June 2024 stood at Rs 3.40 lakh crore.
However, the recovery in the June quarter touched 84.15% of the fair value of the stressed companies when they were admitted for resolution and 122.81% of the liquidation value of these assets. The longer-term averages were 84.93% and 161.17%, respectively. Higher recovery against the fair value indicates substantial erosion of the value of the stressed firms when the IBC was tapped by the creditors.
‘Homebuyers can be resolution applicants’
IBBI chairman Ravi Mital has said home buyers are eligible to submit resolution plans for distressed real estate projects. In a newsletter, Mital said: “The Code permits FCs (financial creditors, including home buyers) to submit resolution plans for the CD (corporate debtor).” “The introduction of IBC has brought a glimmer of hope, offering a structured mechanism for resolving insolvency and reviving real estate projects,” he said.
Last month, Mital had exhorted resolution professionals to try and raise the recovery rate to at least 40%. He called on the professionals to be “as innovative as possible.” He expected the number of resolved cases under the IBC to beat last year’s record in FY25. About 270 insolvency cases were resolved under the IBC last fiscal year.
