One of the far-reaching spill-over effects of the Insolvency and Bankruptcy Code (IBC) has been the behavioral change effectuated by it among debtors.
The fear of losing control over their companies upon initiation of Corporate Insolvency Resolution Processes (CIRP) has nudged thousands of debtors to settle their dues even before the initiation of insolvency proceedings.
“Until September 30, 2022, 23,417 applications for initiation of CIRPs of corpoate debtors having underlying default of ₹7.3 lakh crore were disposed of before their admission into CIRP,” the Economic Survey said.
Sectoral analysis reveals that 52 per cent of the ongoing CIRPs belong to industry, followed by 37 per cent in the services sector by September 2022.
Further, within the industry, 74 per cent of the initiated CIRPs was from the manufacturing sector. Of these, the textile, basic metals and food sectors accounted for 48 per cent of the ongoing CIRPs. While in the services sector 60 per cent of the ongoing CIRPs belongs to real estate, renting and business activities.