Financial creditors recover only 10% of claims in 23 resolutions during Oct-Dec quarter
In the October-December 2020 quarter, 23 Corporate Insolvency Resolution Processes (CIRPs) yielded resolution plans helping banks and other financial institutions recover Rs 7,673 crore, or 9.63% of the Rs 60,922 crore claims of financial creditors, according to the quarter newsletter issued by the Insolvency and Bankruptcy Board of India (IBBI).
Of the 23 CIRPs yielding resolution, the biggest one (in terms of financial creditors’ claim) was that of Reliance Infratel, which owed Rs 41,055 crore to banks and financial institutions. However, the recovery in this case was a paltry Rs 4234 core, or 10.32% of the financial creditors’ claims. The recovery was in this case was even lower than the liquidation value of Rs 4,340 crore.
Other big cases resolved during the quarter were Castex Technologies (with recovery of Rs 1,266 crore against FCs claim of Rs 7,522 crore) and Asian Colour Coated Ispat (with recovery of Rs 1,538 crore against FCs claims of Rs 6,567 crore).
Till December 2020, 317 CIRPs ended in resolution recovering Rs 1.97 lakh crore, or just about 40% of the financial creditors’ claim of Rs 4.96 lakh crore.
During October-December 2020 quarter, 82 CIRPs ended in liquidation, taking the total CIRPs ending in liquidation to 1126 (excluding 10 cases where liquidation orders have been set aside by NCLT/NCLAT/ SC). Of the CDs sent for liquidation, three-fourth were either sick or defunct and of the firms rescued, one-third were either sick or defunct, said the IBBI quarterly newsletter.
Liquidations
During the October-December quarter nine more liquidation processes were closed, taking total number of dissolutions/sold as going concern to 100. Till December 31, 2020, four corporate debtors (CDs) — Emmanuel Engineering Private Limited, KTC Foods Private Limited, Southern Online Bio Technologies and Smaat India Private Limited, were closed by sale as a going concern under liquidation process. These four CDs had claims amounting to Rs 737 crore, as against the liquidation value of Rs 60.03 crore. The liquidators in these cases realised Rs 81.58 crore and the companies were rescued.
The corporate debtors which have been ordered to be liquidated had an aggregate claim of Rs 6.15 lakh crore. However, according to the IBBI newsletter, they had assets on the ground valued only at Rs 0.44 lakh crore. Till December, 2020, 194 CDs have been completely liquidated. Many of these CDs did not have any job or asset when they entered the IBC process. These included likes of Ghotaringa Minerals Limited and Orchid Healthcare Private Limited, which owed Rs 8,163 crore, while they had absolutely no assets and employment. These 194 CDs together had outstanding claims of Rs 27,194 crore, but the assets valued at Rs 770 crore. Around Rs 726 crore were realised through liquidation of these companies.
Time taken for closure
The 317 CIRPs, which have yielded resolution plans by the end of December, 2020, took on average 386 days (after excluding the time excluded by the AA) for conclusion of process. Similarly, the 1126 CIRPs, which ended up in orders for liquidation, took on average 330 days for conclusion. Further, 194 liquidation processes, which have closed by submission of final reports took on average 384 days for closure. Similarly, 360 voluntary liquidation processes, which have closed by submission of final reports, took on average 373 days for closure.
