Mumbai: The number of corporate insolvency resolution process (CIRP) outstanding has seen a sharp increase with many of them failing to achieve closure with in the stipulated time period mandated under the Insolvency and Bankruptcy Code (IBC). About 68 per cent of the cases had exceeded the maximum 270-day timeline allowed under the IBC.
As on December 31, 2018, rating agency Icra said 898 CIRP’s were awaiting a resolution. While 79 CIRPs ended in resolution, 302 cases had entered into liquidation, which is a very high proportion.
“The number of CIRPs outstanding are expected to only increase further at least for the next few quarters until adequate steps are taken to ensure that the CIRP does not significantly exceed the 180/270-day timeline prescribed under the IBC,” the rating agency said.
Even the CIRPs that are eventually yielding a resolution plan are witnessing an increase in the duration between the commencement of the CIRP and the final approval from the National Company Law Tribunal (NCLT).
According to it, the CIRPs for the pending seven corporate debtors from the Reserve Bank’s initial set of 12 large defaulter cases identified in June 2017 which are still on-going, have seen the average duration of the process now exceed 500 days, which does not help the investor sentiment.
It estimates that the timely conclusion of CIRPs of these pending entities could have brought in additional Rs 65,000~67,000 crore to the financial creditors, which is equivalent to about 6.5 per cent of the gross non performing assets (NPAs) in the banking sector....