Average time taken for IBC resolution at three-year high

For the CIRP yielding resolution process, the timeline recorded for Q1 of FY24 has been the highest at 635 and 643 days for OCs and FCs, respectively, since FY21. It has seen a significant jump over the same quarter of the previous fiscal (OCs: 555, FCs: 552), the report said.

The average timeline for resolution of cases for corporate debtors (CDs) was 541 days in Q1 FY24, same as in FY23. The resolution timeline for CDs was 516 days in FY2022 and 439 in FY2021, India Ratings report said based on an analysis of the Insolvency and Bankruptcy Board of India’s (IBBI) June data.

In cases of liquidation, the average time taken during the June quarter was 480, 458 and 391 days for FCs, OCs, and CDs, respectively, which is the highest in the past three years.

India Ratings said liquidation continues to dominate closure of CIRP with a 45 per cent of the share. Apart from resolution, the cases have either been closed on appeal/review/settlement or by withdrawal under Section 12A.

Section 12A gives power to the Adjudicatory Authority (AA) to allow withdrawal of case post admission under CIRP if the creditors and applicant have agreed to a settlement.

The report said CDs, OCs and FCs witnessed a marginal improvement in realisations during the June quarter of FY2024 compared to the year-ago period. While the realisation for CDs was 18.3 per cent compared to 18.2 per cent, it was 17.7 per cent for OCs as against 15.7 per cent.

The share of ongoing cases under CIRP for 270 days and above reflects a rising trend in Q1 FY24 in comparison with Q1 FY23 and FY23. The share of ongoing cases under CIRP for 90 days and below was at a three-year low of 10 per cent in June 2024 quarter.