Synopsis:
- Up until Q2FY25, the overall recovery rate was 31.04%, which suggests a 70% haircut. Since larger resolutions have previously been completed and a sizable portion of liquidated cases were either BIFR cases or defunct with high-resolution time, the cumulative recovery rate has been declining, falling from 43% in Q1FY20 and 32.06% in Q1FY25. Nonetheless, the ratio of resolution to liquidation serves as a gauge for the code’s efficacy. As a result of many efforts to enhance results, the ratio increased from 0.21 in FY18 to 0.68 in Q2FY25.
- The number of insolvency cases referred rose by about 13% year over year in Q2FY25 after slowing down during the pandemic of FY21 and FY22. The number of cases admitted to the insolvency procedure is still smaller than it was in previous quarters of FY20, despite the increase. Due to the longer resolution times, the distribution of cases across sectors is essentially unchanged from previous periods.
- In the meantime, the number of active CIRPs remains just below 2,000 cases, with the majority of cases occurring in manufacturing.
