NCLT approves 45 resolution plans, orders 19 liquidations in 2 years of IBC

Of these resolution plans, at least 12 are being implemented, while four are being contested at NCLAT

The National Company Law Tribunal (NCLT) has sanctioned 45 resolution plans almost two years after the first set of insolvent corporates were taken for proceedings under the Insolvency and Bankruptcy Code (IBC), according to a report by Debtwire Asia.

Further, the NCLT has ordered for the liquidation of 19 companies since proceedings under the IBC officially began at the end of December 2016.

Of these resolution plans, at least 12 are being implemented while four are being contested at the National Company Law Appellate Tribunal (NCLAT). Debtwire Asia says there is a lack of public information on the implementation status of the remaining 29 plans.

In June 2016, the Reserve Bank of India (RBI) referred twelve insolvent corporates for IBC proceedings known as the ‘Dirty Dozen’. As of date the resolution plans of only four of the Dirty Dozen, including the ongoing resolution process for Bhushan Steel, have received approvals from the NCLT.

The report analysed the resolution plans for 27 cases and found that on average the cash recovery rate for lenders was 41.16 per cent, given that financial creditors are to receive a total of Rs 498.99 billion in claims.

In the case of the Dirty Dozen, the average cash recovery for the financial creditors of Bhushan Steel stands at 46.2 per cent on (total financial claims worth Rs 560.22 billion). While in the case of Electrosteel Steel,s the cash recovery for lenders stands at 40 per cent (Rs 131.8 billion), followed by Amtek Auto at 26 per cent (Rs 126.05 billion) and Monnet Ispat at 22 per cent (Rs 110.15 billion).

According to the Insolvency and Bankruptcy Board of India (IBBI) only seven cases saw financial creditors receive 100 per cent of their dues, which was pegged at Rs 1.45 billion, for the seven companies.

Further, the report found that the NCLT on average took 275 days to approve a resolution plan from the time the corporate debtor was admitted under the Corporate Insolvency Resolution Process (CIRP) of the IBC.

For the larger cases, the NCLT on average took 306 days to approve of the resolution plan(s), which indicates that the time-line prescribed in the IBC has not been adhered to, in the strictest sense.

Out of the 45 resolution plans that have been accepted by the NCLT, as of date, around 26 cases took longer than the prescribed 270 days. While the CIRP for only 4 cases were completed within the original 180 day time-line.

The Table above shows the bench-wise split of the 45 IBC cases analysed in the report.

The Principal bench of the NCLT in New Delhi sanctioned 4 resolution plans which included Rs 561.8 billion worth of financial claims (or 46.3 per cent of the total claims filed by financial creditors’).

Whereas the Kolkata bench saction 15 resolution plans, with Rs 329.67 billion worth of financial creditors’ claims (or 27.2 per cent of the total claims filed by financial creditors’ in these 45 cases).

Surprisingly, the Mumbai bench has only resolved 12.5 per cent of the of the total claims filed by financial creditors’ and has approved of 10 resolution plans, with Rs 152.08 billion worth of claims filed by lenders.