Creditors have realised ₹3.89 lakh crore under resolution plans till March, accounting for 32 per cent of the admitted claims by them, a senior official from the Insolvency & Bankruptcy Board of India said on Saturday.

A total of 1,194 cases have been resolved under the Insolvency & Bankruptcy Code, 2016 till that period and the realised recovery represents 170.02 per cent of the liquidation value and 93.36 per cent of the fair value, Jithesh John, executive director of the IBBI, informed.

Joining virtually at the 8th IBC Conclave organised by the CII, John said the realised value did not take into account the possible realisation through corporate and personal guarantors and recovery against avoidance transactions.

Moreover, 40 per cent of the corporate debtors which underwent the corporate insolvency resolution process were defunct companies. “This is the real success of the Code that even defunct companies have been made operational through this process, leading to job creation. In these cases, the claimants have realised 150.33 per cent of liquidation value and 18.96 per cent of their admitted claims,” John said.

According to Bijay Murmuria, chairman of banking and financial services subcommittee of CII Eastern Region, there has been a consistent upward trend in resolutions and a significant downward shift in liquidations since 2020-21.

“In 2017-18, for every corporate debtor (CD) resolved, five went into liquidation. However, in 2024-25 (until December 2024), for every one CD resolved, only 1.3 went into liquidation. This marks a clear reversal in the trend of companies going into liquidation under the Code,” Murmuria argued.

John argued that IBC changed the debtors’ behaviour. “The provisions of the IBC have prompted debtors to take early action in distress situations, marking a positive shift in their behaviour. There’s a noticeable improvement in credit discipline, with 30,310 cases settled prior to admission, covering underlying defaults worth ₹13.78 lakh crore till December, 2024.

According to the RBI’s trend and progress of banking in India for the year 2023-24 report, out of the ₹96,325 crore recovered by scheduled commercial banks through various channels, ₹46,340 crore has been recovered through IBC alone, he noted.

Turnaround

John cited an IIM Ahmedabad study that demonstrates how IBC has helped the economy by getting sick assets back on stronger financial footing.

Average sales of firms that underwent resolution increased by 76 per cent in the three years following resolution. While net margins remain negative, resolved firms have achieved operational break-even (4 per cent operating margin) by the third-year post-resolution, a significant improvement from the pre-resolution period.

There was a 50 per cent increase in average employee expenses three years post-resolution, indicating higher employment intensity in resolved listed firms. Total employment across firms also showed a substantial increase.

Average total assets of resolved firms increased by about 50 per cent post-resolution, coupled with a 130 per cent increase in capital expenditure, indicating a build-up of tangible assets.

“For listed resolved firms, there was a significant revival in average market valuations post-resolution. The aggregate market valuation of all resolved firms increased
from around ₹2 lakh crore to ₹6 lakh crore post-resolution,” John noted.