Mumbai, May 28 (PTI) The recoveries under the Insolvency and Bankruptcy Code (IBC) against admitted claims nearly halved in FY 2025-26 to 23 per cent from 46 per cent in the preceding financial year due to rising delays, a report said on Thursday.
At the same time, the number of cases admitted in the corporate insolvency resolution process (CIRP) declined by 5 per cent to 679 from 724, according to a report by rating agency Icra.
This was led by a significant drop in recoveries to 22 per cent in H2 2025-26 from 63 per cent in H2 2024-25, which is a cause for concern, the rating agency outlined.
Since the introduction of the IBC in 2016, a total of 8,987 corporate debtors have been admitted, with 64 per cent of the CIRPs being resolved, either through a successful RP (resolution plan), withdrawal or liquidation, by March 2026.
“The IBC, which completed 10 years in May 2026, continues to be plagued by long resolution timeframes, high haircuts for lenders and a sizeable share of liquidation cases. After the strong recovery witnessed in FY25, realisations dipped sharply with the third quarter of FY26 seeing the worst haircut of 80 per cent," Icra Senior Vice President and Group Head, Structured Finance Ratings, Manushree Saggar, said.
Further, she stated that almost 78 per cent of the ongoing CIRP cases had exceeded 270 days, post admission by the NCLT, as on March 31, 2026.
"Although the seventh IBC amendment bill was passed in April 2026 to address shortcomings, Icra believes that the actual implementation of the revised code would be critical to improve the success rate. Also, while various measures have been undertaken to place a greater onus on the NCLT to resolve cases in a time-bound manner, it continues to be affected by manpower shortfall, leading to elongated timelines and consequently significant haircuts,” Saggar added.
Empirical data suggests that recoveries in case of successful RPs (31 per cent recovery) have been higher than for cases resolved through liquidation (4 per cent recovery), the report mentioned.
An encouraging sign was lower liquidations in H2 2025-26, resulting in a resolution to liquidation ratio of 1.11 against 0.77 in H1 2025-26.
The decline in recovery rates in 2025-26 was due to a few large cases (admitted claims of more than Rs 1,000 crore), wherein 24 per cent recovery was achieved against the admitted claims.
These cases accounted for 95 per cent of the recovery amount but a minuscule 8 per cent of the number of approved RPs in 2025-26.
According to Icra, an improvement in recoveries for large cases would be critical to the overall success of the Code.
The average resolution time worsened to 744 days as of March 31, 2026, from 713 days as of March 31, 2025, significantly exceeding the deadline provided by the IBC.
Real estate and construction continued to account for the highest number of cases admitted in 2025-26, as per the report.
At the same time, the number of cases admitted in the corporate insolvency resolution process (CIRP) declined by 5 per cent to 679 from 724, according to a report by rating agency Icra.
This was led by a significant drop in recoveries to 22 per cent in H2 2025-26 from 63 per cent in H2 2024-25, which is a cause for concern, the rating agency outlined.
Since the introduction of the IBC in 2016, a total of 8,987 corporate debtors have been admitted, with 64 per cent of the CIRPs being resolved, either through a successful RP (resolution plan), withdrawal or liquidation, by March 2026.
“The IBC, which completed 10 years in May 2026, continues to be plagued by long resolution timeframes, high haircuts for lenders and a sizeable share of liquidation cases. After the strong recovery witnessed in FY25, realisations dipped sharply with the third quarter of FY26 seeing the worst haircut of 80 per cent," Icra Senior Vice President and Group Head, Structured Finance Ratings, Manushree Saggar, said.
Further, she stated that almost 78 per cent of the ongoing CIRP cases had exceeded 270 days, post admission by the NCLT, as on March 31, 2026.
"Although the seventh IBC amendment bill was passed in April 2026 to address shortcomings, Icra believes that the actual implementation of the revised code would be critical to improve the success rate. Also, while various measures have been undertaken to place a greater onus on the NCLT to resolve cases in a time-bound manner, it continues to be affected by manpower shortfall, leading to elongated timelines and consequently significant haircuts,” Saggar added.
Empirical data suggests that recoveries in case of successful RPs (31 per cent recovery) have been higher than for cases resolved through liquidation (4 per cent recovery), the report mentioned.
An encouraging sign was lower liquidations in H2 2025-26, resulting in a resolution to liquidation ratio of 1.11 against 0.77 in H1 2025-26.
The decline in recovery rates in 2025-26 was due to a few large cases (admitted claims of more than Rs 1,000 crore), wherein 24 per cent recovery was achieved against the admitted claims.
These cases accounted for 95 per cent of the recovery amount but a minuscule 8 per cent of the number of approved RPs in 2025-26.
According to Icra, an improvement in recoveries for large cases would be critical to the overall success of the Code.
The average resolution time worsened to 744 days as of March 31, 2026, from 713 days as of March 31, 2025, significantly exceeding the deadline provided by the IBC.
Real estate and construction continued to account for the highest number of cases admitted in 2025-26, as per the report.
(This story has not been edited by THE WEEK and is auto-generated from PTI)
Disclaimer: Comments posted here are the sole responsibility of the user and do not reflect the views of THE WEEK. Obscene or offensive remarks against any person, religion, community or nation are punishable under IT rules and may invite legal action.
