India witnesses 43% surge in successful insolvency resolutions, pendency declines in FY24

India witnessed around 43 per cent year-on-year jump in the successful resolution of cases to 270 under the Insolvency & Bankruptcy Code (IBC) in the last financial year from 189 cases during the previous financial year.

It was the first time in a year when the number of outputs increased from the number of inputs, and thus the pendency of cases in the National Company Law Tribunal (NCLT) benches across the country is going down, Sudhaker Shukla, Whole Time Member of the Insolvency and Bankruptcy Board of India (IBBI), said on Saturday.

Shukla, who was speaking at the 7th Annual Conference on Insolvency & Bankruptcy Code (IBC) organised by CII Eastern Region, said over a period of time, the law has evolved and in the year 2023-24, around 12 amendments were made in IBBI with 86 interventions in a single year.

“We are responding to the market needs to bridge the gaps according to the requirements, where sectoral aspects were also touched, trying to follow the sandbox approach. The recent amendments were approved for the real estate sector, where project wise resolution was made. Keeping the allotted houses from the liquidation was a big step forward in a sectoral approach,” he said.

The IBBI is expected to submit a report to the government in the next two to three months on introducing voluntary mediation as a dispute resolution mechanism under the IBC.

Shukla said a pre-pack resolution framework for large accounts was also under consideration to speed up the resolution process. Currently, pre-pack resolution is only allowed for MSME cases.

NARCL Managing Director & CEO P Santhosh said delays in resolution would deteriorate the quality of assets, and revival of resolutions would be difficult.

“There are multiple factors for delays in resolution, and to avoid delay coordination with the financial creditors is much more important. Also, the pre-pack insolvency is yet to take up. However, many practitioners have discussed that this is one of the tools that can be extended to larger corporate debtors (CDs). Initially, there could be a promoter-led resolution plan, which can be improved over time,” Santhosh added.