As of March-end, it took 408 days from the insolvency commencement date to the approval of the resolution. A thrust of the law was to provide for a time-bound resolution — ideally within 180 days, which could be extended by another 90 days.
But with litigation in other forums excluded, it is now taking close to 600 days, according to data with the Insolvency & Bankruptcy Board of India. Nearly 75% of the cases have crossed the 270-day period.
Since the Insolvency & Bankruptcy Code (IBC) came into force in December 2016, 4,541 cases have been filed in NCLT with 2,859 closed. And of these 396 have seen the resolution plans approved, translating into a success rate of 14%.
The numbers also revealed that 47% of the cases have ended up in liquidation although IBBI said that three-fourths were either sick or defunct. “A lot of the assets were badly impaired by the time the IBC process started,” said an official.
The IBBI report argued that in value terms, nearly 75% of distressed companies were rescued either through the resolution route or via liquidation. “The corporate debtors (CDs) rescued had assets valued at Rs 1.46 lakh crore, while the CDs referred for liquidation had assets valued at Rs 0.49 lakh crore when they were admitted to CIRP. Thus, in value terms, around 75% of distressed assets were rescued.”
The government has repeatedly pointed out that just an application before the NCLT has resulted in debtors paying up before the case is admitted. A majority of applications have therefore been withdrawn, including some high-profile ones.