Realisations through IBC to take a hit of up to 40% in FY21: Icra

Covid-19 outbreak, suspension of new proceedings under IBC has sharply slowed down resolution process causing realisation for financial creditors to decline

Financial creditors may realise just Rs 600-650 billion in FY21 through successful resolution plans from the Insolvency and Bankruptcy Code, as compared to about Rs one trillion FY2020, according to estimates by Icra.

“The outbreak of the Covid-19 pandemic and the suspension of new proceedings under the IBC has resulted in a sharp slowdown in the resolution process and accordingly the realisation for financial creditors has declined.” 

For the first six months of FY21, only 42 companies undergoing corporate insolvency resolution process (CIRP) have seen a resolution plan being approved. This yielded Rs 12,600 crore as recovery for financial creditors.

The backlog of