Insolvency tribunal NCLT approved 180 resolution plans in FY23, the highest ever, resulting in a total recovery of Rs 51,424 crore from stressed assets. Whereas, in terms of amount recovered for creditors, it is the second highest after FY19 when the total recovery was Rs 1.11 lakh crore after completing 77 insolvency proceedings including some big cases like Essar Steel and Monnet Ispat.
This has helped creditors of debt-ridden firms in FY23 to receive 36 per cent of the total admitted claims of Rs 1,42,543 crore for the year ending March 31, 2023. The combined total liquidation value of assets of 180 corporate debtors (CDs) stood at Rs 39,110.10 crore and creditors received 131 per cent more than this, according to data released by the Insolvency and Bankruptcy Board of India (IBBI).
Also in FY23, the National Company Law Tribunal (NCLT) accepted 1,255 applications from creditors for initiation of the Corporate Insolvency Resolution Process (CIRP), which is one of the highest number since 2019. The NCLT approved 147 resolution plans in FY22, 121 in FY21 and 134 in FY20, in which creditors recovered 23 per cent, 17 per cent and 26 per cent of their admitted claims, respectively.
As per the data, the NCLT has approved a total of 678 resolution plans till the end of FY23 and “realised Rs 2.86 lakh crore to the creditors”. IBBI’s latest newsletter said the liquidation value is estimated at Rs 2.65 lakh crore and Rs 1.70 lakh crore against total creditors’ claims of Rs 8.99 lakh crore.
According to the newspaper, creditors have received 68.47 percent of the liquidation value and more than 83 percent of the fair value. It added, “The haircut for creditors was less than 17 per cent in relation to the fair value of the assets, as against about 68 per cent relative to their admitted claims.”
In November last year, the government had appointed a total of 15 judicial and technical members to the NCLT. There are total 31 benches of NCLT all over India and 28 of them are functional.
Meanwhile, the tribunal is facing a shortage of judges and support staff, including court masters, officers and assistant registrars. Out of the sanctioned strength of 63 Judicial and Technical Members including the Chairperson, NCLT currently has a total of 37 members.
A single NCLT bench requires at least one judicial member and one technical member to function. Under the IBC, a CIRP is to be completed within a mandatory period of not more than 330 days. Recently, concerns have also been expressed over the delay in CIRP cases by NCLT.
Meanwhile, the total number of CIRPs initiated by NCLT benches so far is 6,567 and out of them 4,515 CIRPs have been closed. “Out of the closed CIRPs, 2,485 cases were salvaged from CDs, of which 959 have been closed on appeal or review or settlement, 848 have been withdrawn and 678 cases have ended in approval of the resolution plan. while 2,030 have ended up in liquidation orders. said the newspaper.
The highest number of companies against whom CIRP was initiated were from the manufacturing and real estate sectors, accounting for 39 per cent and 21 per cent, respectively, of the total admissions. The construction sector accounted for 11 per cent and wholesale and retail trade for 10 per cent of the total CIRP penetration by the end of March 2023.
As per the data, over 76 per cent CIRPs ended up in liquidation as lenders failed to find a suitable buyer within the maximum mandatory period of 330 days. Earlier this year, the NCLT approved Suraksha Realty’s resolution plan for Jaypee Infratech Ltd. This was one of the 12 large accounts against which CIRP was initiated by banks following directions from the Reserve Bank of India (RBI).
Out of 12 cases, resolution plan was approved for nine CDs and liquidation orders were issued for two CDs.
(This story has not been edited by News18 staff and is published from a syndicated news agency feed – PTI,