Only 17% yielded a resolution plan with the remaining cases withdrawn post National Company Law Tribunal (NCLT) admission as on March 31, and liquidation for 960 corporate debtors were completed where creditors realised only 4% of their total admitted claims under the Insolvency and Bankruptcy Code (IBC), ICRA said in a study.
The NCLT approved a record 269 resolution plans under the IBC in FY24, surpassing FY23 record of 189 cases, but the rise in average duration of the resolution process has caused worries, ICRA said.
Creditor claims of ₹1.7 lakh crore were resolved through resolution plan approvals in FY24 against ₹1.5 lakh crore in FY23 and haircut by lenders rose to 73% from 64%, it added.
Average duration to close Corporate Insolvency Resolution Process (CIRP) rose to 843 days in FY24. The number of CIRPs closed through liquidation orders continued to outpace those yielding a resolution plan, ICRA said.
Abhishek Dafria, Group Head, Structured Finance Ratings at ICRA,said, “We continue to find creditors approaching the NCLT to admit a defaulting debtor with substantial delays, which results in significant erosion of assets. Further, there is an acute difficulty in closing the CIRPs in a time-bound manner, on account of litigations by the promoters or dissenting creditors as well as overburdened NCLT benches.”
In addition to the CIRPs, the NCLT also passed liquidation orders for 446 corporate debtors in FY24 against 400 corporate debtors in FY23. The number of CIRPs that have resulted in liquidation continues to be significantly high at 45% of the 5,467 closed CIRPs, since the inception of IBC, ICRA said.
