Revival of 45 bankrupt firms will meet 50% of lenders' claims: IBBI chief

Currently, there are about 800 corporates undergoing CIRP and about 100 cases have been closed on appeal or review, M S Sahoo said

About 45 bankrupt companies have been approved for revival under the new insolvency law and this will recover more than Rs 500 billion, or 50 per cent of the total claim of creditors, a senior official has said.

"The recovery from these 45 companies approved for resolution is about 50 per cent of the total claims of the creditors, which is very good," Insolvency and Bankruptcy Board of India (IBBI) Chairperson M S Sahoo told IANS in an interview.

About 1,100 companies have been admitted in the Corporate Insolvency Resolution Process (CIRP) since the implementation of the Insolvency and Bankruptcy Code (IBC) in 2016 and the admission of the first company in January 2017, Sahoo said.

"More than 180 companies have been sent for liquidation. Currently, there are about 800 corporates undergoing CIRP and about 100 cases have been closed on appeal or review as they should not have been admitted in the first instance," Sahoo said.

Without revealing further details about the recent months, Sahoo said the recovery in 34 companies that were approved for resolution till June end was about 56 per cent, which was much higher than the liquidation value of these stressed assets.

The resolution plans for the 34 companies assure recovery of Rs 498.26 billion against the total creditors' claim of Rs 894.86 billion, IBBI data shows. With liquidation value of these 34 companies at Rs 210 billion, the recovery stands at 237 per cent.

However, the 136 companies sent for liquidation till June end are likely to recover less than Rs 50 billion, about nine per cent of the total admitted claims against these 136 companies at around Rs 576 billion, as per IBBI data for June quarter.

"Of the 136 companies sent for liquidation, 110 companies were already either in Board for Industrial and Financial Reconstruction (BIFR) or were non-functional. And, most of these (106) had a resolution value less than the liquidation value," Sahoo said.

On state-run banks such as SBI and PNB planning to sell their non-performing assets (NPAs) to asset reconstruction companies (ARCs) and others, the IBBI chief said it was a good development as people should have options to select from.

"That is good. People should have options. IBC should be another competitive option to them. In some cases, IBC is better, somewhere Debts Recovery Tribunal (DRT) is better, sometimes going to ARC is better, somewhere Sashakt scheme is better."