Creditors have taken 70% haircuts in 612 resolved cases under IBC so far

Financial creditors realised Rs 2.53 lakh crore from the 612 cases of resolution under the Insolvency and Bankruptcy Code, translating into total haircut of 69.6% for banks and financial creditors. In the 612 cases, the total admitted claims amounted to Rs 8.3 lakh crore. Though, the amount realised is  175% of the total liquidation value of the corporate debtors involved in these cases, the rate of realisation when compared with the admitted claims is too low.

In the October-December 2022 period, total 59 cases were reported to be resolved through IBC, Rs 7,060 crores were recovered by the financial creditors of their total admitted claims of Rs 30,104 crore.

During the October-December 2022 period, two large cases involving over Rs 10,000 crore claims of financial creditors were resolved. In case of Reliance Naval and Engineering Limited, financial creditors realised Rs 2043 crore against their admitted claims of Rs 12,900 crore. The resolution plan of Swan Energy and Hazel Mercantile Limited (HML) was approved by the NCLT in the case.

In the case of Uttam Galva Steel, the financial creditors realised Rs 3,700 crore out of their admitted claims of Rs 11,500 crore.

Liquidation

Till 31 December 2022, 1901 CIRPs ended in liquidation (excluding 1 case where liquidation order has been set aside by NCLAT and 1 case which had earlier ended with order of liquidation has since yielded resolution). As many as 243 liquidations were closed by dissolution, 20 by going concern sale and 9 by compromise /arrangement.

About 76% of the CIRPs ending in liquidation (1451 out of 1896 for which data are available) were earlier with BIFR and/or defunct. These CDs had assets, on average, valued at less than 8% of the outstanding debt amount, according to the quarterly report of the Insolvency and Bankruptcy Board of India (IBBI).

Sale as Going Concern

Till 31 December 2022, 20 corporate debtors were closed by sale as a going concern under liquidation process. These 20 CDs had claims amounting to Rs 16,579 crore, as against the liquidation value of Rs 542 crore. The liquidators in these cases realised Rs 616 crore and companies were rescued.

Large Cases involving admitted claims Rs 1,000 or more

Of the 611 corporate debtors rescued under the IBC, 102 had admitted claims of more than Rs 1000 crore. Till December 2022, 102 such CDs have yielded resolution plans. The realisable value of the assets available with these 102 CDs, when they entered the CIRP, was only Rs 1.26 lakh crore, though they owed Rs 7.49 lakh crore to the creditors. They yielded Rs 2.33 lakh crore through resolution.

Till 31 December 2022, realisation by the claimants under resolution plans in comparison to liquidation value is 184.13%, while the realisation by them in comparison to their claims is 30.97%. These realisations are exclusive of realisations that would arise from value of equity holdings post-resolution, resolution of PGs to CDs, and from disposal of applications for avoidance transactions.

Avoidance Transactions

Till 31 December 2022, 847 avoidance transactions were reported involving Rs 2.83 lakh crore. Of the total, 143 cases involving Rs 41,300 crore were disposed off resulting in claw back of Rs 5,083 crore.

Voluntary Liquidation

Of the 1416 corporate persons that initiated voluntary liquidations (excluding 14 withdrawal/ suspensions) till 31 December 2022. Most of these corporate persons are small entities. 876 of them have paid-up equity capital of less than Rs 1 crore. Only 199 of them have paid-up capital exceeding Rs 5 crore. The corporate persons, for which details are available, have an aggregate paid-up capital of Rs 10,487 crore.

Individual insolvency process

As per the information received from the applicants, IPs, and data collected from various benches of NCLT and DRT, 1612 applications have been filed (involving debt of Rs 1.41 lakh crore) as of 31 December 2022 for initiation of personal insolvency resolution process (PIRP) of personal guarantors to CDs. Out of them, 154 applications have been filed by the debtors and 1,458 applications by the creditors under sections 94 and 95 of the Code, respectively. Among them 22 have been filed before different benches of DRT and 1590 have been filed before different benches of NCLT (Table 12). Of the 1612 applications, 59 applications have been withdrawn/ rejected/ dismissed before the appointment of RP and RPs have been appointed in 674 cases. After the appointment of RP, 33 cases have been withdrawn/ rejected/ dismissed and 154 cases have been admitted.

Resolution before admission

Till December 2022, 24,222 applications for initiation of CIRPs of corporate debtors having underlying default of Rs 7,69,037 crore were resolved before their admission. Only a few companies, who fail to address the distress in any of earlier stages, pass through the entire resolution process.

Also See: Data