Banking News

Financial creditors pip operational ones in insolvency filings in FY23

For the first time in six years, financial creditors beat operational creditors in invoking insolvency proceedings under the bankruptcy law in the last fiscal year.

The data compiled by the Insolvency and Bankruptcy Board of India (IBBI) showed that 650 cases of corporate insolvency resolution process (CIRP) were initiated by financial creditors in FY23, against 535 by operational creditors and 70 by the corporate debtors themselves. The Insolvency and Bankruptcy Code (IBC) came into being in FY17.

Experts attribute the surge in the last fiscal to subdued filings by financial creditors in the previous two years (FY21 and FY22) in the aftermath of the pandemic.

The latest numbers also suggest financial creditors’ faith in the IBC hasn’t quite shaken despite “not-so-high recovery at times”, said a senior government official.

In fact, there was a 75% surge in the insolvency cases initiated by financial creditors in FY23 from a year before, while those by operational creditors rose only 13%, showed the data.

Cumulatively, operational creditors still lead the pack, having initiated insolvency proceedings in 3,265 cases between FY17 and FY23, compared with 2,912 cases by financial creditors and 390 by corporate debtors, the data showed. So, operational creditors account for almost a half of the 6,567 CIRP cases filed so far, against 44.3% by financial creditors.

Creditors recovered Rs 2.86 lakh crore, or almost 32% of their admitted claims, in 674 cases. To be fair, in the case of 586 companies, the realisation was over 83% against the fair value worked out when they were admitted for CIRP. Moreover, the creditors have realised over 168% of the liquidation value of these companies.

Source link

Leave a Comment