“These prolonged timelines highlight the impact of ageing cases, litigation and procedural bottlenecks on recovery efficiency,” it pointed.
Even as delays remained a challenge, recoveries under IBC improved sequentially in the April-June quarter, with financial creditors recovering 28.6% of admitted claims, compared with 22.8% in the January-March quarter.
During the quarter, financial creditors realised Rs. 3,557 crore against admitted claims of Rs. 12,443 crore. On a cumulative basis, creditors have realised Rs. 4.35 lakh crore, equivalent to 30.5% of admitted claims.
Even as the realisations may seem very low, CareEdge points that the outcomes are still way better than liquidation value of the assets, which reaffirmed the value-accretive nature of resolution-led outcomes relative to liquidation.
For instance, recoveries in the June quarter were 136.7% of the liquidation value and cumulative recoveries so far have been 166.6% of liquidation value.
Also, CareEdge noted that the actual realisation percentage is likely to be higher, as resolutions involving older cases could include accrued interest and other receivables added to admitted claims, which could be significant. This will be over and above the actual principal outstanding and overdue amounts.
A large number of the cases that get admitted under IBC remain from manufacturing, real estate and construction sectors, data showed.
The concentration of insolvency cases in these sectors highlights their relatively higher exposure to leverage, cash flow volatility, project execution risks and cyclical demand conditions, it said.
