Resolution for 94 stressed assets reached Rs 75k cr with 43% recovery rate: Assocham-Crisil study

Mangaluru, May 3: With a respectable recovery rate of 43 per cent, resolution for 94 stressed assets has been reached for Rs 75,000 crore as on March 31, 2019 out of Rs 1,75,000 crore total claim of financial creditors admitted under the Corporate Insolvency Resolution Process (CIRP) approved by the National Company Law Tribunal (NCLT), noted a just concluded Assocham-Crisil joint study.
“The average resolution timeline for resolved 94 cases was 324 days vis-à-vis the stipulated insolvency resolution timeline of 270 days,” noted the study titled, ‘Strengthening the code,’ conducted by The Associated Chambers of Commerce and Industry of India (Assocham) jointly with rating firm Crisil, thereby highlighting that adherence to IBC (Insolvency and Bankruptcy Code) timelines still remains a challenge.
The study also noted that had these 94 cases undergone the liquidation process, the recovery rate for financial creditors would have been 22 per cent which is significantly lower than the recovery rate through normal resolution process.
As on March 31, 2019, there were 1,143 cases outstanding under CIRP, of which resolution in 32 per cent of the cases was pending for more than 270 days, it added.
It highlighted that there are a few big-ticket accounts for which resolution has not been finalised for over 400 days.
“This still is considerably faster than the recovery time of 3.5-4 years taken by asset reconstruction companies (ARCs),” the Assocham-Crisil report stated, adding that it is also far better than the World Bank’s ‘Doing Business 2019’ report, which pegs the recovery timeline for stressed assets in India at 4.3 years.
It further said that IBC is a key reform in the path of strengthening identification and resolution of insolvencies in India and in an expedited manner. “The code has provided creditors and other stakeholders the ammunition to obtain the maximum value for stressed assets by shifting the balance of power from debtors – a big plus.”
The report however said that given the development and the amendments we have seen already, the stressed assets resolution framework in the country is still a work in progress.
While resolution in a time-bound manner remains a challenge along with other teething issues, the IBC, undoubtedly, since the time of its enactment has evolved considerably.