Page 18 - IBBI-JUNE-SEPTEMBER 2022

Time For Conclusion of Process
The average time taken for completion of various processes is presented in Table 9.

Table 9: Average Time for Approval of Resolution Plans/Orders for Liquidation Time (In days)
Sl. Average time As on March, 2021 As on March, 2022 April, 2022 to September, 2022
No. of Time No. of Time No. of Time
Processes Including Excluding Processes Including Excluding Processes Including Excluding
covered covered covered
excluded excluded time excluded excluded excluded excluded
time time time time time
CIRPs
1 From ICD to approval of resolution plans by AA 353 464 406 496 535 450 57 785 679
2 From ICD to order for Liquidation by AA 1287 352 NA 1628 414 NA 180 650 NA
Liquidations
3 )URP /&' WR VXEPLVVLRQ RI ÀQDO UHSRUW XQGHU 267 424 NA 384 480 NA 45 715 NA
Liquidation
4 )URP /&' WR VXEPLVVLRQ RI ÀQDO UHSRUW XQGHU 426 383 NA 669 427 NA 145 338 NA
Voluntary Liquidation
5 From LCD to order for dissolution under Liquidation 146 398 NA 235 518 NA 23 906 NA
6 From LCD to order for dissolution under Voluntary 233 515 NA 333 586 NA 75 745 NA
Liquidation
Corporate Liquidation Accounts Summary of Outcomes
The Regulations require a Liquidator to deposit the amount of unclaimed (a) The primary objective of the Code is rescuing lives of CDs in distress.
dividends, if any, and undistributed proceeds, if any, in a liquidation process The Code has rescued 2139 CDs (553 through resolution plans, 846 through
along with any income earned thereon into the corporate liquidation appeal or review or settlement and 740 through withdrawal) till September,
account before he submits an application for dissolution of the corporate 2022. It has referred 1807 CDs for liquidation. The resolved CDs had assets
person. It also provides a process for a stakeholder to seek withdrawal from valued at ` 1.37 lakh crore, while the CDs referred for liquidation had assets
the said account. Similar provisions exist for voluntary liquidation processes. valued at ` 0.60 lakh crore when they were admitted to CIRP. Thus, in value
The details of these accounts at the end of September, 2022 are presented terms, around 70% of distressed assets were resolved. Of the CDs sent
in Table 10. IRU OLTXLGDWLRQ WKUHH IRXUWK ZHUH HLWKHU VLFN RU GHIXQFW DQG RI WKH ÀUPV
resolved, one-third were either sick or defunct.
Table 10: Corporate Liquidation Accounts as on September, 2022 (b) The realisable value of the assets available with the 553 CDs rescued,
(Amount in ` lakh) when they entered the CIRP, was only ` 1.37 lakh crore, though they owed
Period Opening Balance Deposit during Withdrawn Balance at the ` 7.91 lakh crore to creditors. The resolution plans realised ` 2.43 lakh
the period during the end of the period crore, which is around178% of the liquidation value of these CDs. Any other
period
option of recovery or liquidation would have recovered at best ` 100 minus
Corporate Liquidation Account
the cost of recovery/liquidation, while the creditors recovered ` 178 under
2019 - 20 0.00 476.26 0.21 476.05
the Code. The excess recovery of ` 78 is a bonus from the Code. Though
2020 - 21 476.05 116.18 0.00 592.23
recovery is incidental under the Code, the FCs recovered 32.95% of their
2021 - 22 592.23 25.93 4.84 613.32
FODLPV ZKLFK RQO\ UHÁHFWV WKH H[WHQW RI YDOXH HURVLRQ E\ WKH WLPH WKH &'V
Apr - Jun, 2022 613.32 8.36 0.00 621.68
entered CIRP, yet it is the highest among all options available to creditors for
Jul - Sep, 2022 621.68 222.01 0.00 843.69
recovery. Resolution plans on average are yielding 84.00% of fair value of the
Corporate Voluntary Liquidation Account
CDs. These realisations are exclusive of realisations that would arise from
2019 - 20 0.00 109.70 0.00 109.70
value of equity holdings post-resolution, resolution of PGs to CDs, and from
2020 - 21 109.70 112.06 0.00 221.76
disposal of applications for avoidance transactions.
2021 - 22 221.76 127.94 0.03 349.67
Apr - Jun, 2022 349.67 2.02 10.42 341.27 (c) The 1807 CDs ending up with orders for liquidation had an aggregate
Jul - Sep, 2022 341.27 3.79 0.00 345.06 claim of ` 8.28 lakh crore. However, they had assets, on the ground,
valued only at ` 0.60 lakh crore. Till September, 2022, 429 CDs have been
Pre-Packaged Insolvency Resolution Process completely liquidated. Many of these CDs did not have any job or asset
when they entered the IBC process. These included the likes of Ghotaringa
The Central Government enacted the Insolvency and Bankruptcy Code
(Amendment) Act, 2021 on August 11, 2021 which was deemed to have Minerals Limited and Orchid Healthcare Private Limited, which owed
` 8,163 crore, while they had absolutely no assets and employment. These
come into force on April 4, 2021 introducing the Pre-packaged Insolvency
Resolution Process (PPIRP) for corporate MSMEs. On April 9, 2021, the 429 CDs together had outstanding claims of ` 84,024.74 crore, but the
&HQWUDO *RYHUQPHQW QRWLÀHG WKH ,QVROYHQF\ DQG %DQNUXSWF\ 3UH SDFNDJHG assets valued at ` 3,574.61 crore. ` 3,306.24 crore were realised through
Insolvency Resolution Process) Rules, 2021 prescribing the manner and form liquidation of these companies.
RI PDNLQJ DSSOLFDWLRQ WR LQLWLDWH 33,53 DQG WKH ,%%, QRWLÀHG WKH ,%%, 3UH (d) A distressed asset has a life cycle. Its value gradually declines with time
packaged Insolvency Resolution Process) Regulations, 2021. The Regulations if distress is not addressed. The credible threat of the Code, that a CD may
provide for manner of carrying out certain processes and tasks under PPIRP. change hands, has changed the behaviour of debtors. Thousands of debtors
As per the information available with the Board, two applications have been are resolving distress in early stages of distress. They are resolving when
admitted as on September 30, 2022. The details are in Table 11. GHIDXOW LV LPPLQHQW RQ UHFHLSW RI D QRWLFH IRU UHSD\PHQW EXW EHIRUH ÀOLQJ DQ
DSSOLFDWLRQ DIWHU ÀOLQJ DSSOLFDWLRQ EXW EHIRUH LWV DGPLVVLRQ DQG HYHQ DIWHU
Table 11: List of cases admitted for PPIRP as on September 30, 2022 admission of the application, and making best effort to avoid consequences
of resolution process. Most companies are rescued at these stages. Till
Sl. Name of the CD Date of admission Name of the NCLT Bench
September, 2022, 23417 applications for initiation of CIRPs of CDs having
1 *&&/ ,QIUDVWUXFWXUH 3URMHFWV /WG 14-09-21 Ahmedabad
underlying default of ` 7,31,472.77 crore were resolved before their
2 Loonland Developers Pvt. Ltd. 29-11-21 Principal Bench, New Delhi
18
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IBBI newsletter.indd 18
IBBI newsletter.indd 18 11/15/2022 12:24:50 PM