Creditors recover Rs. Rs 49,783 crore under IBC code
Creditors have recovered Rs 49,783 crore, around 56% of their registered claims, from 32 stressed companies where insolvency resolution plans were approved by the National Company Law Tribunal (NCLT) by the end of June, showed data compiled by the Insolvency and Bankruptcy Board of India.
According to the industry sources despite the average 44 per cent haircut that the creditors took, Insolvency and Bankruptcy Code (IBC) has performed much better than the earlier system where the recovery process was strenuous and yielded too little. Of course, the numbers are good mainly because of Bhushan Steel, which accounted for close to 64 per cent of the total claims by these 32 firms and an equal amount in recovery.
Financial creditors, such as banks, have managed to recover Rs 47,768 crore, or a little over 55 per cent of their claims, showed the data by insolvency regulator, compiled on the basis of the inputs provided by resolution professionals (RPs). Operational creditors — including raw material suppliers — have received Rs 2,015 crore, making up for 61 per cent of their claims. Financial creditors, expectedly, made up for the bulk (96 per cent) of the total claims admitted by RPs.
“The IBC is way better than the earlier system, where recovery used to take a lot of time, and wherever a one-time settlement took place, the amount was usually not more than 20-30 per cent. Also, many stressed firms were allowed debt restructuring, which further worsened their state of health. In contrast, the IBC stipulates a time-bound resolution of default cases, which is good,” said Manoj Kumar, partner and head (M&A and insolvency resolution services) at consultancy Corporate Professionals Capital.
Interestingly, in nine of these 32 cases, insolvency proceedings were triggered by the corporate debtors themselves, while 14 were by financial creditors and nine by operational creditors. As many as 12 cases were handled by the NCLT’s Kolkata bench, and eight by the Mumbai bench.
