195 businesses make it to bankruptcy tribunals in Q3

NEW DELHI: In the December quarter, 195 businesses were admitted to the National Company Law Tribunal (NCLT) benches for bankruptcy resolution, taking the total cases ending up in courts for rescue to 4946 cases so far, said an official update from Insolvency and Bankruptcy Board of India.

The figures show that close to 200 bankruptcy cases are being added to the tribunals and around 50 cases are getting closed in each quarter, gradually pushing up the burden on tribunals. Data also show that while the number of cases getting liquidated are relatively high, these companies have very little assets while the cases which are getting rescued, although relatively fewer in number, have substantial assets, which are getting redeployed in the economy.

Of the total cases ending up in tribunals, 3,247 have been closed in various ways including liquidation, resolution and settlement or withdrawal at the end of December. Among all closed cases, in just over 14%, bankruptcy resolution plan was approved, while in about 47% cases, liquidation was ordered, showed the data.

At the end of December, 1,699 bankruptcy cases are continuing in tribunals, 73% of which have exceeded 270 days, showed the data. Bulk of the cases ending up in tribunals and were also getting closed, resolved or liquidated are in the manufacturing and real estate sectors, indicating the stress that these industries face.

December quarter data shows that under the Insolvency and Bankruptcy Code (IBC), 457 cases were rescued so far, one third of which were in deep distress. The businesses rescued had assets of ₹)1.5 lakh crore, while the 1,514 cases referred for liquidation had assets of only ₹55,000 crore when they were admitted. “Thus, in value terms, 73% of distressed assets were rescued,” IBBI said in the latest update. According to industry executives, businesses with a strong asset base find it easier to attract investors and put together a turnaround plan under IBC.