Insolvency regulator IBBI is likely to issue regulations based on the discussion paper circulated earlier to reduce delays and improve resolution value under the Business Insolvency Resolution Process (CIRP) d by the end of this month.
According to Ravi Mittal, President, IBBI, the regulations would be issued based on consensus received from stakeholders on the discussion paper presented earlier.
The IBBI had recently published a discussion paper aimed at reducing delays and improving the value of the resolution by making certain changes, including modifying the timelines for activities under the CIRP and providing guiding factors that allow the CoC (creditors’ committee) to decide on early liquidation, among other things.
“We had months of discussion with all stakeholders and tried to reach a consensus. We should be able to issue regulations by the end of this month,” Mittal said during the 6 e edition of the “Conference on Insolvency and Bankruptcy Code” organized by the Confederation of Indian Industry virtually on Wednesday.
1,852 files still in progress under the CIRP
As of March 31, 2022, up to 5,258 cases have been admitted through the CIRP process. Of these, nearly 1,609 have ended up in liquidation, about 480 cases have been resolved while nearly 1,852 cases are still ongoing, according to IBBI data.
Most of the files admitted were filed by operational creditors (2,699) and financial creditors (2,236) while only about 319 files were filed by the companies themselves. The average realization of a financial creditor after resolution has followed a downward trend and is close to 24%, compared to around 50% in the first 8 to 10 cases.
The manufacturing sector accounts for almost 40% of the total number of admitted cases; construction represents 11% while real estate represents another 20%.
More and more withdrawn cases
According to Rohit Kapoor, Member (Judicial), NCLT Kolkata, there has been an increase in cases of withdrawal of cases over the past few weeks. “We have noticed over the past few weeks that we admit petitions, appoint a resolution professional, but before the CoC is formed they want to step aside. It seems the promoter or debtor company has realized there is no way out, so either manage to pay or face CIRP,” he said.
August 17, 2022