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65% of Insolvency Cases going Beyond Deadline.

According to data from the Insolvency and Bankruptcy Board of India (IBBI), as of June 30, 2023, more than 65% of the cases dealing with corporate bankruptcy resolution have gone above 270 days. The IBBI revealed that 64% of the continuing corporate insolvency resolution cases had gone above the 270-day mark in the preceding quarter. According to the IBBI’s most recent quarterly newsletter, 10% of the cases as of June 30 had been ongoing for 180 to 270 days or longer.

Additionally, just 10% of the cases had a timeline of fewer than 90 days, and 15% of the resolutions had been ongoing for between 90 and 180 days. The Insolvency and Bankruptcy Code (IBC) 2016 intended to create a time-bound framework and was first positioned as a quick replacement for the frequently slow earlier processes. Maintaining promptness is the essential priority in order to stop additional declines in a company’s viability or the value of its assets. According to a 2022 article by The Hindu, the IBC first set a 180-day timeline for wrapping up the settlement procedure, with a potential extension of 90 days.

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Insolvency Completion Period Increased by 330 Days:

The overall completion period was increased by later IBC modifications to 330 days, or almost a year. When the deadline was 180 days plus a 90-day extension in 2018, the majority of cases—including those involving corporations with liabilities ranging from Rs 50 crore to Rs 1000 crore—were settled in less than 300 days. However, cases involving businesses with debts greater than Rs 1,000 crore took as long as 772 days to be resolved in the fiscal year 2022. According to experts, the time it takes to resolve these cases on average has rapidly increased over the previous five years, the research said.

Investors are becoming increasingly concerned about the lengthy schedule for cases to be resolved under the Insolvency and Bankruptcy Code, which has prompted initiatives to speed up these proceedings. Creditors were able to receive Rs 2.92 lakh crore through the resolution process up until June 30, 2023. The estimated fair value of the assets that were accessible when these corporate debtors started the Corporate Insolvency Resolution Process (CIRP) was Rs 2.72 lakh crore, while the liquidation value was estimated at Rs 1.74 lakh crore. In comparison, the total amount of claims was Rs 9.23 lakh crore.

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