The National Company Law Tribunal (NCLT) has reached a significant milestone by approving a record-breaking 180 resolution plans in the fiscal year 2022-23. This achievement has resulted in a total realization of Rs 51,424 crore from distressed assets, marking the highest-ever number of resolution plans sanctioned by the NCLT. While this accomplishment is commendable, it is the second-highest in terms of amount realization for creditors, following the fiscal year 2018-19, during which Rs 1.11 lakh crore was recovered through 77 insolvency proceedings, including prominent cases like Essar Steel and Monnet Ispat.
This remarkable outcome has greatly benefited creditors of debt-ridden companies in FY23, enabling them to recover 36 percent of their total admitted claims amounting to Rs 1,42,543 crore for the year ending March 31, 2023. The combined liquidation value of the assets of the 180 corporate debtors (CD) stood at Rs 39,110.10 crore, with creditors receiving a realization that exceeded it by 131 percent, according to data released by the Insolvency and Bankruptcy Board of India (IBBI).
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In addition, the NCLT admitted 1,255 applications from creditors for initiating the Corporate Insolvency Resolution Process (CIRP) in FY23, marking one of the highest numbers since 2019. Over the years, the NCLT has approved 678 resolution plans, resulting in a cumulative realization of Rs 2.86 lakh crore for creditors. The assets’ fair value at the time of entering the CIRP was estimated at Rs 2.65 lakh crore, while the liquidation value was Rs 1.70 lakh crore against creditors’ total claims amounting to Rs 8.99 lakh crore.
Despite these accomplishments, challenges remain for the NCLT, including a shortage of judges and support staff, which has led to concerns over delays in CIRP matters. Additionally, more than 76 percent of the CIRPs concluded in liquidation, as lenders struggled to find suitable buyers within the mandated 330-day period. Nevertheless, the NCLT continues its efforts to efficiently resolve insolvency cases, contributing to the recovery of distressed assets and the stability of the corporate sector.
