New Delhi
The recovery rate from personal guarantors under the Insolvency and Bankruptcy Code (IBC) currently stands at 5.22 per cent, with expectations for a rise following a recent Supreme Court ruling affirming the constitutionality of IBC provisions regarding Personal Guarantors’ Insolvency Resolution, as per a report by Care Edge Ratings. The Supreme Court’s ruling allows the utilization of personal assets of guarantors to settle outstanding debts owed to creditors. The report notes that only 21 cases have yielded approval of repayment plans, realizing Rs 91.27 crore, which is 5.22 per cent of their approved claims. Approximately 62 cases have been withdrawn, rejected, or dismissed. In the broader context of ongoing Corporate Insolvency Resolution Processes (CIRPs), the report highlights a delay of more than 270 days in the completion of the process for 67 per cent of ongoing CIRPs in September 2023, compared to 73 per cent in September 2021 and 63 per cent in September 2022. The majority of cases are pending for more than two years, with approximately 55 per cent falling into this category and another 20 per cent pending for more than one year. The report also provides insights into the overall recovery rate post the implementation of the IBC, reaching 32.9 per cent till Q4FY22 in India. The recovery rate for Q2FY24 stands at 33.01 per cent, with the overall recovery rate reaching 31.85 per cent till Q2FY24. Despite resolutions, creditors continue to face a haircut of approximately 68 per cent on admitted claims.
