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Lenders set to recover 43.1% from insolvency proceedings

Resolutions in the quarter through December 2019 yielded only around 12.2%, or about Rs 2,879 crore, of the admitted claims of Rs 23,668 crore. In the preceding quarter, lenders recovered around 34.4% of their total claims of Rs 78,592 crore. Many large cases have already been resolved and smaller companies undergoing resolution process are finding fewer suitors.

ET Bureau|
Last Updated: Feb 15, 2020, 10.08 PM IST
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IBC-
A total of 190 corporate insolvency proceedings since the IBC came into force have ended with successful resolution plans till December 31, 2019.
NEW DELHI: Successful resolutions of corporate insolvency proceedings till the end of 2019 are set to result in recoveries of Rs 1.52 lakh crore for lenders, averaging 43.1% of their admitted claims of Rs 3.52 lakh crore, according to data released by the Insolvency and Bankruptcy Board of India (IBBI).

Resolutions in the quarter through December 2019, however, yielded only around 12.2%, or about Rs 2,879 crore, of the admitted claims of Rs 23,668 crore. In the preceding quarter, lenders recovered around 34.4% of their total claims of Rs 78,592 crore.

Many of the large cases have already been resolved and the smaller companies that are undergoing resolution process are finding fewer suitors, said experts, explaining the reason for the fall in recoveries.

“Trends suggest that there are lower recoveries in smaller cases, where there are not many takers for stranded business assets. With many of the larger cases beings resolved or near resolution, we are likely to see lower average recoveries for lenders going forward,” said an industry watcher, who wished to remain anonymous.

The Reserve Bank of India had initially referred 12 large nonperforming accounts with outstanding claims of Rs 3.45 lakh crore to be resolved under the Insolvency and Bankruptcy Code.

Seven of these cases have ended with the approval of resolution plans, while in two cases the bankruptcy court has ordered liquidation. Three other cases are currently undergoing the insolvency resolution process.

A total of 190 corporate insolvency proceedings since the IBC came into force have ended with successful resolution plans till December 31, 2019. However, in 57.7% of the proceedings, or 780 cases, the court has ordered liquidation of the corporate debtors’ assets.

The IBBI newsletter noted that about 72.5% of the cases that ended with liquidation orders were earlier under the Board of Industrial and Financial Reconstruction regime. “The economic value in most of these CDs (corporate debtors) had already eroded before they were admitted into CIRP (corporate insolvency resolution process,” the IBBI release said.

Separately, 579 voluntary liquidation proceedings have been initiated by corporate debtors till the end of 2019.

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