Eight summers have gone by since the IBC (Insolvency and Bankruptcy Code) came into being in 2016. What has it achieved? Has debt resolution through IBC been effective?
Proof of the pudding is in eating, it is often said. Well, the numbers give a clarity on that. Thanks to IBC, 1194 CDs (corporate debt) have been rescued through resolution plans till March 2025. Another 1276 cases have been settled through appeal or review or settlement until March 2025. About 1154 cases have been withdrawn under section 12A of the IBC. About 2758 CDs have been referred for liquidation under IBC.
These numbers are sourced from the quarterly newsletter published by Insolvency and Bankruptcy Board of India.
The creditors have, in all, realized Rs 3.89 lakh crore under the resolution plans till March 2025. This realisation is more than 32.8% of the admitted claims and over 170.1% of the liquidation value. Resolution plans, on an average, are yielding 93.41% of the fair value of the CDs.
Till March 2025, 1374 CDs have been completely liquidated with submission of the final report. Out of the 1374 CDs, 878 have been closed. In the closed liquidations, the creditors have realised Rs. 9330 crore, which is nearly 90% realisation as against the liquidation value. “As a result of the behavioural change caused by the Code, thousands of debtors are settling their dues before the start of insolvency proceedings,” the report said.
About 30,310 cases having underlying default worth Rs. 13.78 lakh crore have been settled pre-admission. Post-admission, the IBC has resolved 1194 cases through resolution plans. About 2,430 cases have been closed through settlement, withdrawals and appeal. And, 878 liquidations have closed. “Over the years, more and more companies are being resolved under IBC and the number of liquidations are going down. This is reflected in the improved ratio of number of cases ending with resolution vis-à-vis cases in which liquidation is ordered,” the report said.
In 2017-18, for every 1 CD resolved, 5 CDs would go into liquidation. Steadily, this ratio has now improved to nearly 10 CDs being resolved against 5 CDs going to liquidation. Out of 1194 Resolution Plans over the last eight years, 60% (708) resolutions were done in the last 3 years.
Furthermore, the last three years have witnessed an unprecedented surge in the approval of resolution plans under the IBC, underscoring the effectiveness of the legal framework in facilitating the revival of insolvent businesses
