Insolvency tribunals may take a decade to clear pending cases: Eco Survey

The Economic Survey warns India's insolvency tribunals could take nearly a decade to clear pending cases, flagging long delays as a key risk to the IBC regime

The Economic Survey of India for 2025–26 has cautioned that India’s insolvency tribunals may take close to a decade to dispose of their existing caseload if current disposal rates persist. With about 30,600 matters pending before National Company Law Tribunals (NCLTs) nationwide, the survey said systemic delays pose a serious risk to the functioning of the insolvency regime.

 

The Survey has also flagged prolonged timelines as a structural bottleneck, noting that resolution processes routinely run far beyond the limits set under the Insolvency and Bankruptcy Code, 2016. Although the insolvency regime prescribes a maximum of 330 days for completing the Corporate Insolvency Resolution Process (CIRP), including extensions, cases are taking more than twice that time on average. Overall, insolvency processes are being completed in about 713 days, while those closed in FY25 stretched to an average of 853 days — an overrun of more than 150 per cent.

 

 

The survey attributed these delays to constraints at multiple levels. It pointed out that just 30 NCLT benches currently shoulder the combined workload under the IBC and the Companies Act. Shortages among insolvency professionals were also highlighted. Of the 4,527 registered resolution professionals (RPs), only 2,198 — around half — have an active authorisation to take up assignments.

 

Even so, the survey underlined that insolvency outcomes have steadily improved since the IBC came into force. By September 2025, 57 per cent of closed CIRP cases had resulted in the rescue of firms as a going concern. This included 1,300 cases resolved through approved plans, 1,342 closed through appeal, review or settlement, and 1,223 withdrawn with creditor consent under Section 12A. Liquidation orders accounted for the remaining 43 per cent, covering 2,896 companies, the survey noted.

 

The survey highlighted that resolution outcomes have strengthened sharply over time, with the ratio of resolutions to liquidations rising from just 20 per cent in FY18 to 91 per cent in FY25.

 

In monetary terms, creditors recovered ₹3.99 lakh crore from the 1,300 cases resolved through plans. These recoveries were equivalent to 94 per cent of the fair value of the businesses and about 170 per cent of what creditors would have realised under liquidation, reinforcing the economic case for resolution-led outcomes.

 

The survey also pointed to improved borrower behaviour following the IBC’s rollout. Citing a study by IIM Bangalore covering nearly six crore corporate loan records between 2018 and 2024, it said overdue amounts fell from 18 per cent of outstanding credit to 9 per cent over the period. The time taken for stressed accounts to return to a standard classification also declined.

 

At the same time, the survey cautioned that extended insolvency proceedings continue to sap asset value, disrupt business operations and dent confidence among stakeholders. It noted that the pre-packaged insolvency framework, introduced in 2021, has seen limited uptake, with only 14 cases admitted so far. Procedural complexity, low awareness, trust concerns around debtor-led processes and financing challenges for MSMEs were cited as key hurdles.

 

Looking ahead, the survey referred to the Insolvency and Bankruptcy Code (Amendment) Bill, 2025, which seeks to streamline procedures and put in place a cross-border insolvency regime. It stressed that sustaining the IBC’s gains will require not just procedural tweaks, but a rapid scaling up of institutional capacity.