News Karnataka
Monday, October 25 2021

Business News

Share of insolvency process initiated by debtors declining over time

Share of insolvency process initiated by debtors declining over time

New Delhi: The share of corporate insolvency resolution processes (CIRP) initiated by corporate debtors themselves have declined over the years since the inception of the Insolvency and Bankruptcy Code (IBC).

Data from the Insolvency and Bankruptcy Board of India (IBBI) showed that as of March 2017, out of the total CIRPs, seven were triggered by operational creditors, eight by financial creditors and 22 by corporate debtors.

As of March 2021, 2,250 CIRPs were inititated by operational creditors. 1,887 were initiated by financial creditors and corporate debtors had triggered 277 CIRPs.

Further in June 2021, resolution processes initiated by operational creditors rose to 2,313, those by financial creditors stood at 1,942 and corporate debtors had triggered 285 CIRPs.

The IBBI data showed that operational creditors triggered 50.93 per cent of the CIRPs. Next came about 42.77 per cent by financial creditors and remaining by the corporate debtors.

80 per cent of CIRPs having an underlying default below Rs 1 crore, were initiated on applications by operational creditors. About 80 per cent of CIRPs, having an underlying default above Rs 10 crore, were initiated by financial creditors.

“The Share of insolvency CIRPs by CDs (corporate debtors) is declining over time. They usually initiated CIRPs with very high underlying defaults,” said the IBBI’s newsletter for April-June 2021.

The IBBI further said that about 47 per cent of the CIRPs, which were closed, yielded order for liquidation. 14 per cent ended up with a resolution plan.

75 per cent of the CIRPs ending of liquidation were earlier with the BIFR or were defunct.

Most of these corporate debtors had almost completely eroded their economic value even before they were admitted into CIRP. These corporate debtors had assets, on average, valued at around 7 per cent of the outstanding debt amount.

Support NewsKarnataka's quality independent journalism with a small contribution.

How useful was this post?

Click on a star to rate it!

Average rating 0 / 5. Vote count: 0

No votes so far! Be the first to rate this post.

Leave a Reply

Your email address will not be published. Required fields are marked *

Subscribe to our Brand New YouTube Channel

Visit 7Jackpots and find the best online casinos in India! Play the most popular casino games for real money!

Find the best odds at 10Cric and ipl betting 2021! Signup today and get up to a 100% deposit bonus.

Subscribe Newsletter

Get latest news karnataka updates on your email.

error: Content is protected !!