Insolvency regulator IBBI is likely to come out with regulations on the basis of the discussion paper circulated earlier to reduce delays and improve the resolution value under the corporate insolvency resolution process (CIRP) by the end of this month.
According to Ravi Mittal, Chairperson, IBBI, regulations would be issued on the basis of consensus received from stakeholders on the discussion paper floated earlier.
IBBI had recently published a discussion paper aimed at reducing delays and improving resolution value by bringing in some changes including change in timelines for activities under CIRP and providing guiding factors for the CoC (committee of creditors) to decide on early liquidation among others.
“We had months of discussion with all stakeholders and tried to come with a consensus. We should be able to issue regulations by the end of this month,” Mittal said at the 6th edition of “Conference on Insolvency and Bankruptcy Code” organised by the Confederation of Indian Industry virtually on Wednesday.
1,852 cases still ongoing under CIRP
As on March 31, 2022, as many as 5,258 cases have been admitted under the CIRP process. Of these, nearly 1,609 have ended up in liquidation, around 480 cases have been resolved while close to 1,852 cases are still ongoing, as per IBBI data.
Most of the cases admitted have been filed by the operational creditors (2,699) and the financial creditors (2,236) while only around 319 cases were filed by the companies themselves. The average realisation for a financial creditor post resolution has been on a declining trend and is close to 24 per cent, as compared to around 50 per cent witnessed in the first 8-10 cases.
Manufacturing sector accounts for nearly 40 per cent of the total cases admitted; construction accounts for 11 per cent while real estate makes up another 20 per cent.
Cases being withdrawn increasingly
According to Rohit Kapoor, Member (Judicial), NCLT Kolkata, there has been an increase in instances of withdrawal of cases over the last few weeks. “We have been noticing over the past few weeks that we admit petitions, appoint resolution professional but before the CoC is formed they want to withdraw. It looks like the promoter or corporate debtor has realised that there is no escape route so either manage to pay or face CIRP,” he said.