Financial creditors may get Rs 60K cr via IBC this fiscal
Financial creditors may realise Rs 55,000-60,000 crore in fiscal 2021-22 through successful resolution plans from the Insolvency and Bankruptcy Code (IBC), credit rating agency Icra has said.
The realisation for financial creditors from the resolution of Corporate Insolvency Resolution Process (CIRP) under the IBC declined significantly in FY2021 with a total resolution amount of around Rs 26,000 crore, almost a quarter of the realisations in FY2020, the agency said.
"As per our estimates, the financial creditors could realise about Rs 55,000-60,000 crore in FY2022 through successful resolution plans from the IBC," the agency's Vice President and Group
Head - Structured Finance, Abhishek Dafria, said in a report.
The increase in the resolution amount in FY2022 would depend on the expected resolution of a large housing finance company which is awaiting the NCLT's approval but is also under litigation in the higher courts, he said.
In the current financial year, the realisation by the financial creditors would depend on the successful resolution of 8-9 big-ticket accounts, as more than 20 per cent of the agency's estimated realisation for the year could be from these alone, he added.
Dafria, however, said if the second wave of the pandemic does not subside soon, it could have a bearing on the agency's estimates as the difficult operating environment may result in a slowdown in the resolution process, especially for smaller-sized entities, and would also result in an increase in the haircuts for the lenders. The pandemic has increased operational challenges for the various parties involved in a CIRP, which resulted in limited cases yielding a resolution plan. The suspension of IBC proceedings for FY21 resulted in a sharp slow-down in the resolution process.