A decade after the Insolvency and Bankruptcy Code came into force, a new study by the Indian Institute of Management Ahmedabad finds that firms resolved under the IBC have seen clear improvement in performance.

The study updates an earlier 2023 analysis and extends the timeline up to 2025. It covers 1,194 firms that underwent the resolution process. Sales numbers show a clear recovery.

The study found that average sales of resolved firms increased by 89 per cent in the five years after resolution, indicating a return of business activity. Operational metrics tell a similar story.

Asset utilisation improved, with the asset turnover ratio rising by about 131 per cent over the same period. Investment activity has picked up as well.

Capital expenditure (capex) by these firms rose by around 106 per cent over five years, pointing to fresh spending after resolution.

Data released by the Insolvency and Bankruptcy Board of India shows that the average asset base increased from Rs 228.33 crore in the year of resolution to Rs 254.60 crore by the fifth year, a rise of around 11.5 per cent. Market valuation has also improved.

The aggregate market capitalisation of these firms went up from about Rs 2.8 lakh crore to Rs 9 lakh crore over five years, reflecting improved investor sentiment after resolution. Liquidity levels have strengthened too.

The study notes an increase of approximately 106 per cent, indicating better short-term financial health. The findings suggest that the IBC process has helped revive distressed firms and bring them back into regular operations.

They have been able to attract fresh investment and improve productivity over time. The data comes as the IBC completes ten years since it was introduced.