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INSOLVENCY AND BANKRUPTCY NEWS

Sl. No. Name of the CD Date of Admission Name of the NCLT Bench companies are rescued at these stages. Till March, 2022, 21,100
applications for initiation of CIRPs of CDs having underlying default of
1 GCCL Infrastructure & Projects Ltd. 14-09-21 Ahmedabad
2 Loonland Developers Pvt. Ltd. 29-11-21 Principal Bench, New Delhi ₹ 6,09,482.17 crore were resolved before their admission. Only a few
In the matter of GCCL Infrastructure & Projects Ltd. a resolution plan has been approved by the CoC companies, who fail to address the distress in any of earlier stages, pass
and approval of the AA is awaited.
through the entire resolution process. At this stage, the value of the
Summary of Outcomes company is substantially eroded, and hence some of them are rescued,
and others liquidated. The recovery may be low at this stage, but
(a) The primary objective of the Code is rescuing lives of CDs in distress.
The Code has rescued 480 CDs till March, 2022 through resolution recovery in early stages of distress is much higher, and it is primarily
plans, one third of which were in deep distress. However, it has because of the Code.
referred 1609 CDs for liquidation. The CDs rescued had assets valued (e) The Code endeavours to close the various processes at the earliest. It
at ₹ 1.31 lakh crore, while the CDs referred for liquidation had assets prescribes timelines for some of them. The 480 CIRPs, which have
valued at ₹ 0.56 lakh crore when they were admitted to CIRP. Thus, in yielded resolution plans by the end of March, 2022 took on average
value terms, around 70% of distressed assets were rescued. Of the 450 days (after excluding the time excluded by the AA) for conclusion
CDs sent for liquidation, three-fourth were either sick or defunct and of process. Similarly, the 1609 CIRPs, which ended up in orders for
of the rms rescued, one-third were either sick or defunct. liquidation, took on average 412 days for conclusion. Further, 328
liquidation processes, which have closed by submission of nal reports
(b) The realisable value of the assets available with the 480 CDs rescued,
took on average 456 days for closure. Similarly, 644 voluntary
when they entered the CIRP, was only ₹ 1.31 lakh crore, though they liquidation processes, which have closed by submission of nal reports,
owed ₹ 7.61 lakh crore to creditors. The resolution plans realised took on average 422 days for closure.
₹ 2.34 lakh crore, which is around 178% of the liquidation value of (f) Till March, 2022, a total of 480 CIRPs have yielded resolution plans.
these CDs. Any other option of recovery or liquidation would have The cost details are available in respect of 455 CIRPs. The cost works
recovered at best ₹ 100 minus the cost of recovery/liquidation, while out on average 1.17% of liquidation value and 0.62% of resolution
the creditors recovered ₹ 178 under the Code. The excess recovery of value.
₹ 78 is a bonus from the Code. Though recovery is incidental under the
Code, the FCs recovered 32.89% of their claims, which only reects Individual Processes
the extent of value erosion by the time the CDs entered CIRP, yet it is
the highest among all options available to creditors for recovery. The provisions relating to insolvency resolution and bankruptcy relating to
Resolution plans on average are yielding 83% of fair value of the CDs. PGs to CDs came into force on December 1, 2019. As per the information
These realisations are exclusive of realisations that would arise from received from the applicants, IPs, and data collected from various benches
value of equity holdings post-resolution, resolution of PGs to CDs, and of NCLT and DRT, 926 applications have since been led as of March 31,
from disposal of applications for avoidance transactions. 2022. Out of them, 82 applications have been led by the debtors and 844
applications by the creditors under sections 94 and 95 of the Code,
(c) The 1609 CDs ending up with orders for liquidation had an aggregate
respectively. Among them 18 have been led before different benches of
claim of ₹ 7.95 lakh crore. However, they had assets, on the ground,
DRT and 908 have been led before different benches of NCLT (Table 9).
valued only at ₹ 0.56 lakh crore. Till March, 2022, 328 CDs have been
completely liquidated. Many of these CDs did not have any job or asset Service Providers
when they entered the IBC process. These included the likes of
Ghotaringa Minerals Limited and Orchid Healthcare Private Limited, Insolvency Professionals
which owed ₹ 8,163 crore, while they had absolutely no assets and
An individual, who is enrolled with an IPA as a professional member and has
employment. These 328 CDs together had outstanding claims of
the required qualication and experience and passed the Limited
₹ 66,381.23 crore, but the assets valued at ₹ 2804.01 crore. ₹ 2696.77
Insolvency Examination, is registered as an IP. An IP needs an authorisation
crore were realised through liquidation of these companies.
for assignment (AFA) to take up an assignment under the Code with effect
(d) A distressed asset has a life cycle. Its value gradually declines with time if from January 1, 2020.
distress is not addressed. The credible threat of the Code, that a CD The IBBI made available an online facility from November 16, 2019 to
may change hands, has changed the behaviour of debtors. Thousands enable an IP to make an application for issuance / renewal of AFA to the
of debtors are resolving distress in early stages of distress. They are concerned IPA. Thereafter, an IPA processes such applications
resolving when default is imminent, on receipt of a notice for electronically. The details of IPs registered as on March 31, 2022 and AFAs
repayment but before ling an application, after ling application but held by them, IPA-wise, is presented in Table 10. A geographical
before its admission, and even after admission of the application, and distribution of IPs as on March 31, 2022 is presented in Figure 21.
making best effort to avoid consequences of resolution process. Most
Table 9: Insolvency Resolution of Personal Guarantors (Amount in `crore)
Period Applications led by Total Adjudicating Authority
Debtors (u/s 94) Creditors (u/s 95)
Number Debt Guarantee Number Debt Guarantee Number Debt Guarantee NCLT DRT
Amount Amount Amount Amount Amount Amount
2019 - 20 3 49.66 40.75 16 3256.87 4,454.83 19 3306.53 4495.58 18 1
2020 - 21 18 1875.65 608.75 191 36415.25 26029.11 209 38290.9 26637.86 203 6
2021 - 22 61 2668.61 1165.44 637 55984.47 41188.71 698 58653.08 42354.15 687 11
Total 82 4593.92 1814.94 844 95656.59 71672.65 926 100250.51 73487.59 908 18
Note:
The data are provisional. These are getting revised on continuous basis as further information is received.
NA: Not Available.
Debt data not available in 110 cases and Guarantee data not available in 326 cases.
Guarantee amount has been collated from the annexures of the applications, wherever available.
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