CHAPTER 7

CONCLUSION AND SUGGESTIONS

7.1. INTRODUCTION:
Insolvency and Bankruptcy has gained a prominence as an area of academic
research in India. The primary objective of enactment of Insolvency and Bankruptcy
Code in 2016 (IBC) and the subsequent establishment of Insolvency and Bankruptcy
Board of India (IBBI) triggered a host of initiatives and objectives like revival and
resolution of a business as a going concern; maximisation of value of assets of the
Corporate Debtor; and promoting entrepreneurship, availability of credit and
balancing the interests of stakeholders. The thesis has mainly focused on Indian
insolvency ecosystem and its interaction with stakeholders, including international
comparison. The object of this thesis is to fundamentally understand the causes and
reasons of business failure, mitigation measures towards revival of business as a
going concern and to provide research-based suggestion for further necessary changes
and improvement in the Code.1
The IBC is significantly playing an instrumental role in the Indian economic
growth by showing decline in NPAs, by facilitating increase in FDI inflows and
improving a high ease of doing business ranking. The IBC alongwith prescribing a
legislative framework for insolvency resolution and bankruptcy, Insolvency and
Bankruptcy Board of India (IBBI) as the regulator was established, this proactively
responds to the changing realities through its regulatory powers. 2 Though frequent
amendments and the various regulations are issued under IBC, it is not yet fully
operational despite it being almost eight years since its enactment.
The present insolvency and bankruptcy regime in India was the outcome of the
suggestions made by the Bankruptcy Law Reforms Committee headed by
Dr. T K Viswanathan. The Committee's recommendations for the new insolvency and
bankruptcy resolution system were based on a few core principles namely
(i) facilitating the assessment of viability of the enterprise at an early stage;
(ii) enabling symmetry of information between creditors and debtors;(iii) ensuring a

1
. www.ijbarr.com - Research Paper - Peer Reviewed & Indexed Journal – ‘Understanding Business
Failure: causes, consequences, and mitigation strategies’ by Gautam Huidrom
2
. https://global restructuring review.com - Asia Pacific restructuring review- Article – ‘Overview of
IBC’- Abhishek Tripathi and Mani Gupta, Sarthak Advocates & Solicitors, 06 October 2021.
time-bound process to better preserve economic value; (iv) respecting the rights of all
creditors, with clarity on priority; and (v) ensuring finality of outcomes.
The Code and its related ecosystem have continued to evolve since then,
effectively advancing the principles mentioned above. However, its implementation
being a function of the broader ecosystem in which it operates, the Code has faced
various criticisms in its relatively short existence, particularly regarding delays in
meeting timelines and unsatisfactory recovery rates, partly due to the misaligned
incentives amongst the stakeholders. While several amendments have been made to
the IBC since its introduction to address some of these concerns, challenges persist.
The asset quality position of the banking system has shown a remarkable
improvement over the past few years – specifically, the gross NPAs of the scheduled
commercial banks have declined from the peak of 11.2% in March 2018 to 2.8% in
March 20243. A good part of that reduction is attributable to resolution processes
enabled under IBC. If an overall assessment of IBC is made, it shows a significant
level of traction as a resolution mechanism. As of September 2024, 8,002 cases 4 have
been admitted into the Corporate Insolvency Resolution Process (CIRP) and
approximately 75% of these cases were closed through resolution, withdrawal,
review, settlement, or liquidation. Of the closed cases, 56% were either resolved,
settled, or withdrawn. In a positive trend, the ratio of resolutions to liquidations has
risen from 21% in 2017-18 to 61% in 2023-24. In addition to facilitating resolution
outcomes, the IBC has also been effectively used by both financial and operational
creditors to encourage borrowers to repay their debts. By March 2024, 28,818 cases
involving an outstanding default amount of ₹10.22 lakh crore were withdrawn prior
to admission.
In terms of the powers vested under newly inserted Section 35AA of the
Banking Regulation Act, RBI had issued directions to banks in 2017 in respect of 41
entities, which accounted for more than 35% of the banking system NPAs at that
point, for filing CIRP applications. So far, resolution plan has been approved in the
case of 17 borrowers5, orders of liquidation have been issued in the case of 12

3
. https://factly.in/data review of IBC - RBI Supervisory returns, last accessed on 19th June 2025.
4
. ibbi.gov.in- Data referred to in this Speech in respect of various aspects of cases referred under IBC
has been compiled from IBBI Quarterly Newsletters.
5
. https://www.bis.org/review - Data compiled by RBI from concerned banks - Inaugural address by
Mr. Rajeshwar Rao, Deputy Governor of the Reserve Bank of India, at the International Conclave,
jointly organised by the Insolvency and Bankruptcy Board of India (IBBI) and INSOL India, New
Delhi, 7 December 2024.
borrowers, settlement was reached by lenders with 2 borrowers; and in 4 cases the
lenders have assigned their exposures to ARCs.
Although the IBC has proven to be a valuable tool for creditors, its full
potential has been realized only to a limited extent. Some of the factors that have
constrained its effectiveness to give a clearer understanding of why the IBC's
potential has not been fully harnessed are mentioned below:
a. Time and Timing are both crucial for the effectiveness of the resolution
process. While delays within the IBC process have been widely discussed, an equally
important issue is the delay in initiating the IBC process itself. The IBC grants all
creditors the right to initiate the CIRP upon default. However, in practice, the average
time taken by financial creditors from the date of default to the filing of the CIRP is
often several months. A significant amount of value is lost during this period, which
ultimately impacts the recovery outcome. In this context, the role of financial
creditors is vital— they must take prompt action to prevent further value erosion.
b. While IBC has gained prominence of late, we need to realise that it is just
one amongst the host of mechanisms available for creditors to resolve financial stress.
There are other statutory mechanisms for enforcing security, as well as out-of-court
workout options for resolution, each with its own role and limitations. From a
regulatory perspective, the Reserve Bank remains neutral regarding the mechanisms
chosen by lenders, as long as the actions are initiated in a timely manner so as to
facilitate the prompt resolution of financial distress.
The real success of a formal insolvency framework lies in its role as a
deterrent than based on its actual use. It is out of court workout procedures that need
to work as the primary instruments of resolution, albeit under the shadow of the
formal insolvency framework.
c. Recognizing this requirement, the Pre-Pack Insolvency Resolution Process
(PPIRP/pre-pack) was introduced in 2021, aimed at resolution of micro, small and
medium sector enterprises (MSMEs), as an alternative to a regular CIRP. The
Pre pack was envisaged to be a panacea for MSMEs as it had all the ingredients to
make a successful resolution recipe: debtor in possession, cost-effective, quicker
resolution timelines and base resolution plan prepared by the MSME itself.
Under the pre-pack arrangement, the MSMEs and creditors have to reach a
prior agreement to resolve, before formally entering into pre-pack insolvency process.
Despite all the advantages, only ten applications have been admitted under PPIRP so
far, out of which one was withdrawn, and resolution plans has been approved in five
cases.
d. The IBC assigns a central role to the Committee of Creditors (CoC) in the
CIRP. However, this is an area where significant improvements are needed. There
have been instances where the CoC’s performance has been found lacking in several
aspects. These include disproportionate prioritization of individual creditors' interests
over the collective interest of the group; disagreements among CoC members on
approving a resolution plan due to concerns over undervaluation or perceived lack of
viability; disagreements on the distribution of proceeds even when a resolution plan is
agreed upon; non-participation in CoC meetings and lack of effective engagement,
coordination, or information exchange among members. Instances have been noted
regarding insufficient skill sets in areas like corporate finance, legislation, and
industry knowledge; and, lastly, the nomination of financial creditors to the CoC are
entrusted with responsibilities that far exceed their actual authority.
It is in the larger interest of the creditors that the issues relating to the conduct
of the CoC are addressed by the members themselves without waiting for regulatory
prescriptions or fiats. However, it is a fact that when incentives are not perfectly
aligned, deviations from best practices become the norm. Therefore, we need an
enforceable code of conduct for the CoC. Obviously, it would not be possible for the
sectoral regulators to enforce this given the diverse set of financial creditors. Ideally,
the IBBI, which is the designated regulator under the IBC, should have the powers to
enforce norms around the conduct of all stakeholders under the IBC process.
e. Another key stakeholder under the IBC ecosystem is the Resolution
Professional (RP) whose expertise and proficiency materially impacts the outcome of
the resolution process. The resolution professional should have thorough knowledge
of the industry, the business environment, laws in force and should also be adept at
financial analysis and management of distressed firms. The aspect of management is
very critical here as the RP takes control of the distressed corporate debtor and
virtually discharges the duty of the MD/CEO, based on the advice of the CoC. Any
shortcomings in the selection and in the action of the RP would be a significant
impediment in the process. The Code implicitly and explicitly casts lot of operational
responsibilities on the RP ranging from collation of claims to finding prospective
resolution applicants to providing material inputs to CoC for finalising the resolution
plan.
 However, in many instances, the RP do not enjoy the cooperation of other
stakeholders, which impairs the ability of the RP to discharge its duties satisfactorily.
It is heartening to note that that IBBI has taken steps to facilitate the training of RPs
through the continuing professional education (CPE) programs, trainings, workshops,
webinars, and seminars. These steps together with better enforcement of conduct
related regulations would go a long way in addressing these issues.
Regulations can set the boundaries for an activity but cannot cover every
detail. While regulations have helped create an ecosystem for Resolution
Professionals (RPs), their compensation should be determined by the market based on
commercial considerations. RPs step in after all attempts to resolve the issue by the
debtor and creditors fail, and they take on the important task of managing the debtor’s
affairs. Managing a corporate debtor under insolvency proceedings requires
specialized skills. The market should develop compensation structures for RPs that
are tied to the outcomes of the resolution process. This would address the principal-
agent issue and align the RP’s goals with the CoC, maximizing value for both parties.
It would also attract experienced professionals, benefiting the system as a whole.
It has been nearly eight years since the introduction of the Code and several
large cases have been successfully resolved under the code. Quality data is being
generated, out of the insolvency process, which could be used in future as inputs for
credit underwriting as well as valuation.
With the rise of technology, the payment ecosystem has undergone significant
transformation. The next step should be for banks and other stakeholders to use
technology to help resolve issues with stressed borrowers. The technology should
focus on several key areas like predicting defaults before they happen based on the
borrower’s data, enabling early corrective action; analysing both structured and
unstructured data to identify related party or preferential transactions, saving
resources for lenders and resolution professionals; automating routine tasks in post-
disbursement credit monitoring, freeing up time for lenders to focus on more complex
issues; and reading legal documents and contracts to provide valuable insights for the
CoC and resolution applicants when valuing the corporate debtor. As technology and
its application evolves on these fronts, there could be significant reduction in effort
involved as well as costs associated with the resolution.
It is possible that bankruptcy or liquidation proceedings may be the only way
for the company to revive and start afresh. However, restructuring and revival of units
as the first option should be considered and enable it in a quick and time bound
manner. There are valuable assets vesting within an enterprise that we as a nation can
ill afford to run doing even though as creditors the liquidation process appears as the
safer and risk free option. For this it may be necessary to create an ecosystem that
encourages revival of the enterprises.
The measures which can make the Code an effective option for unlocking
economic value of an enterprise even as we ensure strict enforcement of the
provisions of the Code in case of recalcitrant or unscrupulous borrowers.

DRAWBACKS: The following drawbacks are identified after perusing available

literature, data and after an interaction with few notable advocates and insolvency
professionals practicing in this area.
1. The first drawback identified in the Code is the purpose of digitization gets
defeated as the requirement for hard copies alongside electronic filings is still insisted.
The Advocates also face challenges due to the absence of NCLAT Benches in certain
regions. Inadequate staffing and poor infrastructure, particularly in certain NCLT
benches, hinder the effective functioning of the tribunal.
2. The opinion of several advocates practising before NCLT and NCLAT, it is
ascertained that the filing process is cumbersome and too technical at times with
objections being raised for the most frivolous of issues. There are difficulties in
getting urgent matters listed without the intervention of the Bench. Sometimes even
after the bench permits, there is a delay in the part of the registry for the scrutiny.
Delhi in particular has tough issues as they are severely short-staffed.”
In furtherance, when the advocates appearing before NCLT Bengaluru Bench
were interviewed, it was ascertained that during the filing process, advocates have to
mandatorily file affidavits which are not required as per IBC law. Such issues have
become prominent after NCLT has taken measures to make the scrutiny process
uniform.
3. The officials in the registry are crucial to the effective working of the
tribunal. As per the NCLT and NCLAT Rules 2016 respectively while there is no
mention of prescribed number of staff in each tribunal, the working hours of these
officials are as of now regulated as a common practice prescribed as 9:30 AM to 6:00
PM. It was hereby ascertained that the officials start work post 10:45 AM and leave
their office by 2 PM in most of NCLT benches. This issue is coupled with a shortage
of staff in most of the benches. The staffing condition of NCLAT Chennai reveals
that the Bench has one stenographer who doubles up as PA to a Technical Member
and the Registrar sits at the Principal Bench in Delhi. The apparent reason cited for
the same is “no one wants to shift to Chennai”. A practising advocate who appeared
before the bench resonated with the condition of the Chennai Bench and stated that
the inadequate staff and poor infrastructure are crippling the working of the NCLAT
Chennai bench.
4. There are several challenges when it comes to the members. A shortage of
members and their absence are contributing factors to pendency at the tribunals . It is
pertinent to mention that the intervention of the Bench in issues arising out of filing
has also not proven very effective in many a case. For instance, a senior member of
the Bar shared “The Deputy Registrar sometimes comes forward as a knight in the
shining armour and expedites the listing. However, the issue with short staffing
continues.”
5. A large caseload, particularly at the NCLT benches in Delhi and Mumbai,
has often led to delays in the adjudication of disputes. While the setting-up of regional
benches across various states and an increase in bench strength at the Delhi and
Mumbai benches were intended to improve the pendency issues, the reality is
different. At present, against the sanctioned strength of 63 members, there are 22
judicial members and 25 technical members. 6 This implies that about one-fourth of
the bench strength is yet to be filled. Out of the current members, 10 judicial members
and 16 technical members are going to retire in 2022, 7 which raises concerns about
whether the appointments made during 2021 would be sufficient to deal with the
exploding docket. Further, through a notification dated 12 May 2022, the bench
strength in the National Company Law Appellate Tribunal (NCLAT) has been
increased from seven to 12 with the addition of three judicial members and two
technical members. Despite some appointments in September 2021, many regional
benches of the NCLT are not fully functional, leading to the diversion of the resources
of other benches. Unless such structural issues are resolved, the number of pending
cases under the IBC will only rise, leading to delays in resolutions.

6
. https://www.financialexpress.com/industry/ large number of vacancies may hit NCLT functioning
(last accessed: on June 10, 2025).
7
. Ibid
 Enforcing judicial discipline in insolvency resolution was one of the principal
objectives of the IBC. In this respect, although the IBC has fared much better than its
predecessor, SICA, many argue that its record is far from satisfactory. The IBC
imposed a strict timeline of 180 days for the corporate insolvency resolution process
(CIRP), which is extendable by another 90 days, at the discretion of the AA. This was
further extended to 330 days through an amendment to the IBC in 2019.
According to the data released by the IBBI, the average time taken for CIRPs
that resulted in resolution plans is 581 days (after excluding time permitted by AAs).
Further, the CIRPs that ended up in liquidation took an average of 654 days for
conclusion.8 Many cases take much longer (Essar Steel’s CIRP took as long as 866
days to complete).
The delays have resulted in eroding value for creditors, and they may arguably
have contributed to larger haircuts by all stakeholders. The number of days taken for
the CIRPs has also swelled owing to the disruptions caused by the Covid-19
pandemic and the resultant circuit breaker measures adopted by the Indian
government. Further, as per the data released by the IBBI, a total of 5,258 CIRPs
commenced under the IBC until 31 March 2022. Of those, 1,852 are ongoing.
The trend of more corporate debtors choosing liquidation instead of resolution
plans continues. According to available data, of the 3,406 CIRPs closed, AAs passed
orders for liquidation in 47 per cent of the CIRPs. The number of corporate debtors
going forward with a resolution plan was a low 14 per cent.9
In most cases, the disruption of timelines is attributable to judicial
intervention. The courts have been liberal in interpreting the boundaries set by the
timelines, which has led to the timelines being construed as merely advisory in nature.
The government and Parliament’s attempts to fix the timelines have been repeatedly
thwarted by the courts. The Supreme Court, in the case of Committee of Creditors of
Essar Steel India Ltd v Satish Kumar Gupta,10 has held the timeline of 330 days
(inserted by way of an amendment in 2019) to be advisory and not mandatory,
holding that the word ‘mandatorily’ is unconstitutional.
The government has largely played a constructive role in facilitating the
implementation of the IBC. It has successfully aligned the banking regulator, the
8
. Insolvency and Bankruptcy Board of India, Insolvency and Bankruptcy News, Vol. 22, January–
March 2022.
9
. Ibid.
10
. 2019 SCC OnLine SC 1478.
Reserve Bank of India (RBI), to push the banking system into using the IBC as the
principal mechanism for resolving debt. This approach has predictably suffered
certain setbacks owing to the Covid-19 pandemic. Where challenges have been faced
in IBC implementation, the government and the IBBI have stepped in to amend the
legislation and the regulations. While, by and large, the amendments have made the
implementation smoother, there have been instances where frequent amendments
have caused confusion.
Suggestions for improvement to make the Code efficient:
a. CoC Responsibilities
The CoC exercise their commercial wisdom and approve/reject the Resolution
Plans placed before them exhibiting fairness and with good reasons. Such a reasoned
decision making on their part will only serve to further enable the other key players
like the Adjudicating Authorities to understand the rationale behind their decision and
to uphold the correctness of the same. Furthermore, it is also suggested that the
Central Government or the IBBI explore the possibilities of better enforcement of the
standards and practices enumerated in the guidelines through an independent
mechanism under the auspices of an oversight committee instead of making them self-
regulatory. This will enable the guidelines to achieve some level of practical and
operational relevance and also prevent any significant lapse in decision making on the
part of the CoC.
 Responsibilities of Successful Resolution Applicant
Once a resolution plan is approved under the IBC, 2016 the Successful
Resolution Applicant undertakes a profound responsibility to implement the plan in
both letter and spirit. This obligation is not merely an empty formality but an enduring
commitment to restore the corporate debtor to viability and ensure a meaningful
turnaround. The role of a Successful Resolution Applicant is thus far more than a
transactional duty towards the creditors or stakeholders; it embodies a pivotal
responsibility to the distressed entity itself, which must be approached with utmost
dedication and an earnest sense of duty.
Regardless of the challenges that may arise, the Successful Resolution
Applicant cannot treat its obligations as optional or conditional, nor can it abdicate its
responsibility in the face of unforeseen obstacles. Its efforts must reflect a
determination to implement the plan fully and to rejuvenate the debtor company, as
this is integral to the success of the IBC framework and the spirit of economic revival
it seeks to foster. The approach, therefore, must not be frugal or narrowly profit-
driven, limited to viewing the transaction through a purely commercial lens. Instead,
it must recognize that rescuing a distressed company is a responsibility of significant
social and economic value, demanding a holistic and responsible strategy.
This involves a dedication to long-term outcomes, where the Successful
Resolution Applicant adopts measures that genuinely support the debtor’s
rehabilitation, rather than making minimal or half-hearted attempts at implementation.
The Courts and tribunals have consistently underscored that the Successful Resolution
Applicant’s role transcends commercial interest and embodies a commitment to the
larger purpose of corporate revival. Consequently, it must make thoughtful and
sustained efforts, demonstrating adaptability and resilience even when faced with
obstacles or operational impediments. Simply put, the Successful Resolution
Applicant cannot step back or dismiss its obligations by attributing delays or setbacks
to the conduct of other stakeholders, as this would undermine the very purpose of
insolvency resolution.
 Duty of lenders and creditors in implementation of Resolution Plan
In this collaborative effort, the duty to implement the plan does not fall on the
Successful Resolution Applicant alone; lenders and creditors are equally obligated to
support the process by offering constructive and continuous cooperation. They must
not impede the implementation process through unnecessary demands beyond the pale
of the resolution plan or with delays in implementation plan but rather should
facilitate the Successful Resolution Applicant’s efforts to revive the corporate debtor.
Given their vested interest in the corporate debtor’s successful revival, lenders have a
fundamental duty to act in good faith and with transparency, recognizing that their
cooperative stance is essential for overcoming the inevitable challenges of the
resolution process. The lender’s role is not merely passive; it requires active support
that aligns with the ultimate goal of the IBC, 2016 — to provide a fair and equitable
resolution that maximizes asset value while enabling the debtor’s recovery.
Therefore, the lenders must balance their financial interests with the broader
objective of rehabilitation. They should not take an obstructive approach or seek to
leverage the resolution process solely for individual benefit, as such actions would
risk destabilizing the corporate debtor’s recovery trajectory. Instead, they must be
prepared to collaborate fully, sharing the responsibility to make the resolution process
work in practice. Through a spirit of cooperation and shared purpose, the Successful
Resolution Applicant and lenders together can ensure that the corporate debtor is
given the best chance for revival and sustained growth, reflecting the Code’s intent to
rescue viable companies and protect broader economic interests.
The IBC, 2016 is silent as regards the phase of implementation of the
Resolution Plan by the Successful Resolution Applicant. This is mostly due to the fact
that each Resolution Plan might be unique and customized to the specific needs of the
Corporate Debtor and an excessive amount of statutory control over the
implementation of the Plan may prove to be counterproductive to the cause of the
Corporate Debtor. However, this has unfortunately led to the consequence of giving
excessive leeway to the Successful Resolution Applicants to act in flagrant violation
of the terms of the Resolution Plan in a lackadaisical manner. The SRAs repeatedly
approach the Adjudicating Authority or the NCLAT for the grant of reliefs in relation
to relaxation of the strict compliance to the terms of the Plan, including the timelines
imposed therein.
The NCLT and NCLAT more often than not, accede to such requests in
exercise of their inherent powers under Rule 11 or their power to extend time under
Rule 15 of the NCLT and NCLAT Rules, 2016 respectively. It is reiterated that the
NCLT and NCLAT must not entertain such repeated attempts at violating the integrity
of a CoC approved Resolution Plan by accommodating the incessant requests of the
Successful Resolution Applicants. The exercise of discretion as regards altering the
binding terms of the Resolution Plan, including the timelines imposed, must be kept at
a minimum, at best. The NCLTs/ NCLATs need to be sensitised of not exercising
their judicial discretion in extending the timelines fixed under IBC, 2016 or the
Resolution Plan, in such a way that it may make the Code lose its effectiveness
thereby rendering it obsolete.
The resolution plan must be impermeable to any shortcuts that prevent its
implementation, including timely implementation, by the successful resolution
applicant. A consideration of these provisions reinforces the idea that timely
implementation and strict adherence to the terms of the resolution plan is crucial.
The Code comes down heavily on any knowing and willful contravention of
the terms of the Resolution Plan, committed by any person, on whom the approved
Resolution Plan has been made binding under Section 31 of the IBC, 2016. A
punishment of minimum one year which may extend up to five years or minimum fine
of one Lakh which may be up to one Crore rupees, or both, has been prescribed for
such a contravention.
In light of such strict consequence provided for the contravention of the
resolution plan envisaged under the scheme of the Code itself, there is good reason for
us to ensure that the successful resolution applicants abide by their commitments
made under the Resolution Plan. Therefore, it is suggested that the authorities
including the NCLT and NCLAT must not aid the Successful Resolution Applicants
in circumventing the strict mandates of the law by acceding to their requests to relax
the terms of the plan itself.
The NCLT while approving a Resolution Plan should record the next steps
which are to be taken by the respective parties for commencement of
implementation of the approved Resolution Plan
One another suggestion at our end that may aid in a coordinated and non-
adversarial implementation of the Resolution Plan by all the stakeholders is that the
Adjudicating Authority while approving a Resolution Plan under Section 31 of the
IBC, 2016, should record the next steps which are to be taken by the respective parties
for commencement of implementation of the approved Resolution Plan. This will
ensure that the parties are ad idem about the next round of their obligations that each
of them is required to discharge under the approved Resolution Plan and that they do
not delay the implementation by initiating any further litigation on this aspect. If such
an approach is adopted, the parties would be able to put forth any difficulty that they
might face in performing those next steps before the NCLT itself and seek necessary
relief in that regard.
Recording the next steps that are to be undertaken in the order of the
Adjudicating Authority, will keep the parties more vigilant since a non-performance
of the obligation may lead to a violation of the terms of the approved Resolution Plan
and also violation of the order approving the Resolution Plan as well.
CoC must be empowered to constitute the Monitoring Committee of Resolution
Professional, other nominees from the CoC and Resolution Applicant
As regards the implementation of the approved Resolution Plan, it is suggested
that the IBC, 2016 statutorily provide for the constitution of a Monitoring Committee
once the plan has been approved, for a smooth handover of the Corporate Debtor to
the Successful Resolution Applicant. Presently, such a provision is absent in the Code
and it is the Adjudicating Authority that orders for the constitution of a Monitoring
Committee to ensure smooth implementation of the Plan.
The CoC must be empowered to constitute the Monitoring Committee which
may, by default, include the Resolution Professional and also include other nominees
from the CoC and the Resolution Applicant respectively. Such a Monitoring
Committee would be entrusted with the powers of monitoring and supervising the
resolution plan till the expiry of the term of the resolution plan. The Committee shall
also be required to ensure all statutory compliances during the implementation of the
plan along with updating the Adjudicating Authorities, Financial and other Creditors
about the status of implementation of the Resolution Plan, on a quarterly basis.
Serious lack of timely admission and disposal of the applications filed as regards
the initiation of CIRP, approval of the resolution plan and liquidation
Moving on to certain efficiency issues within the NCLTs and NCLAT, it has
been noticed over a period of time that there is a serious lack of timely admission and
disposal of the applications filed as regards the initiation of CIRP, approval of the
resolution plan and liquidation. This only adds to the uncertainty of the process and
prolongs the dispute thereby jeopardizing the interest of all the stakeholders involved.
Adjudication in a time-bound manner would help prevent any further deterioration of
the value of the corporate entity. The integrity of the original timelines laid down by
the Code and the resolution plan must not be allowed to be violated since it would
dilute the objective of the Code in its entirety, erode investor confidence and hinder
all corporate restructuring efforts.
The Members often lack the domain knowledge required to appreciate the
nuanced complexities involved in high-stake insolvency matters in order to properly
adjudicate such matters. It has been noticed that the benches of NCLT(s) and NCLAT
don’t have the practice of sitting for the full working hours. They are particularly
lacking in the capacity to manage the growing number of cases and giving undivided
attention required in such matters.
There are serious issues in the manner in which the insolvency matters are
listed. There is no effective system in place before the NCLTs for urgent listings. The
staff of the Registry is given wide power to list or not to list a particular matter.
One of the salutary objects of the Code, 2016 is to protect the assets of the
corporate entity in a timely manner and taken prompt decisions, however, it has
become a practice of the NCLT(s) and NCLAT to ignore the urgent mentionings and
listings of time-sensitive matters and show no deference to long-pending matters
resulting in value erosion of the assets of the Corporate Debtor and rendering their
insolvency resolution process a foregone conclusion.
Over a period of time, this Court has noticed the growing tendency amongst
Members of the NCLT(s) and NCLAT to ignore the orders of this Court or act in its
defiance. We put the NCLT(s) and the NCLAT to notice, that any act of contravention
of this Court’s order and the larger rubric of judicial propriety will not be tolerated.
The NCLT(s) and the NCLAT must seriously rethink their approach towards
admission and disposal of insolvency matters, they should not act as a mere
rubberstamping authority and must take their roles seriously in ensuring time-bound
hearings and resolutions. Proper and effective hearings both virtually and in-court
must be given to insolvency matters of public importance, and the NCLT(s) and
NCLAT(s) must earnestly work towards ensuring that the IBC, 2016 achieves its
avowed object.
A shortage of members in the Tribunals and inadequate infrastructure to
support their functioning
One another serious issue pertaining to the functioning of the NCLTs and
NCLAT is that there is often a shortage of members in the Tribunals and inadequate
infrastructure to support their functioning. These vacancies heavily impact the
insolvency reform initiative undertaken by the government since they lead to
operational inefficiencies. A shortfall of members and the lack of requisite strength
has led to Tribunals only sitting for a few days of the week or a few hours in a day.
Even in Tribunals where there is no vacancy, the absence of requisite infrastructure
has forced the benches to share courtrooms or halls on a rotation basis. As a
consequence, the strict timelines provided in Section 12 of the IBC, 2016 are not
complied with.
Filling such vacancies with experts having adequate domain knowledge in the
field must be prioritized along with addressing the infrastructure needs of the
Tribunals to prevent any adverse effect on the resolution process. There must be strict
mandates regarding the functioning of the Tribunals within its normal working hours.
The appointment of new members must be done in a manner such that it coincides
with the date of retirement of the sitting members in a seamless manner to avoid such
operational inefficiencies. Persons with high ideals & impeccable integrity should be
appointed as Members in the NCLT as well as NCLAT. There should not be any
political appointment.
The Hon’ble Court holds that it is now for the Parliament to look into our suggestions
in consultation with the Insolvency Bankruptcy Board of India and the Ministry of
Finance.
Suggestions were also made to improve the resolution process. Sometimes, claims
are made, or bids are put in at the last moment, further delaying the process. The
appeals filed prolong the resolution process; hence, some mechanisms to discourage
such parties must be incorporated, as many of the participants still had pending
litigation processes. A few participants mentioned difficulty in obtaining bank
financing even after the resolution process was over. The banks were very cautious
and had not removed the label of “defaulter” until after the firms started performing
well. The respondents had varied opinions about the performance and guidance of the
Resolution Professionals (RP) during the interim period. Most participants believed
that the RPs’ competence could be improved through training, as most of them do not
have a business/managerial background. While the committee of creditors are
entrusted with monitoring the RPs, it will be beneficial if there is a control mechanism
through an additional internal auditor or similar arrangements.

One of the most significant issues arising from the Bhushan Power case is the lack of
a provision in the IBC for a stay on the implementation of the resolution plan during
an appeal. Under the current framework, when a resolution plan is approved by the
Adjudicating Authority (NCLT), there is no specific provision addressing what
happens if an appeal is filed against this approval.
The IBC should incorporate provisions that deal with the stay of the
implementation of a resolution plan in the event an appeal is filed against its
approval.
The principle of “commercial wisdom” of the majority creditors has been a
cornerstone of the IBC framework. This has been reinforced through various
decisions of the Supreme Court. However, the lack of clear legislative provision on
this matter leads to inconsistencies in the interpretation of the role of creditors’
decisions.
There is a need for a clearer legislative provision that affirms the
paramountcy of the commercial wisdom of the majority creditors during the
resolution process. Once a resolution plan is approved by the Committee of
Creditors (CoC) with the required majority and subsequently by the
Adjudicating Authority, the appellate courts should have limited judicial powers
to interfere with this decision. The IBC already contains provisions that safeguard
the interests of dissenting creditors under Section 30(2) but there is no safeguard
against assenting lenders. However, once a resolution plan has been approved, there
should be minimal scope for judicial intervention. The appellate tribunal/ court under
Section 61 and 62 of IBC must respect the commercial judgment of the majority
creditors, especially where the plan has been approved by the CoC with a high
majority voting share (e.g., 66%) and has passed the rigorous scrutiny of the
Adjudicating Authority.

The IBC explicitly emphasizes the need for time-bound resolution, as reflected in its
preamble, which mentions “reorganisation and insolvency resolution… in a time-
bound manner.” However, delays at the appellate stage have undermined this
fundamental principle.
Suggestion:
There should be a clear timeline for appellate courts to act on appeals against an
approved resolution plan. This timeline should be binding and provide a framework
within which any challenge to the plan must be resolved. If the appellate authority
does not pass a judgment within this prescribed period, the resolution plan should
automatically proceed without further delay.
The timeline for setting aside an order of resolution plan approval should not extend
beyond a fixed period (e.g., 180-270 days) to ensure that the resolution process
remains efficient and in line with the IBC’s objective of timely resolution.
4. Limited Judicial Review: Respecting the Rigorous Process of CIRP
The current process under the IBC involves multiple layers of checks and balances. A
resolution plan undergoes scrutiny by the Resolution Professional (RP), approval by
the CoC with a 66% voting share, and final approval by the Adjudicating Authority
(NCLT). Given the complexity of the process and the safeguards already in place to
ensure fairness, the role of the appellate courts in reviewing the procedural aspects of
the CIRP should be limited.
Suggestion:
The IBC should be amended to circumscribe the powers of the Appellate Tribunal and
Court under Sections 61 and 62 of the IB Code. These provisions should emphasize
that the Appellate Tribunal/Court should only intervene in cases where there is a
fundamental violation of the law or if the process of resolution has been flawed in
such a way that it undermines the objectives of the IBC.
The Appellate Tribunal should not be permitted to delve into procedural lapses that
have been duly examined by the Resolution Professional, the CoC and thereafter by
the Adjudicating Authority unless there is a clear, material impact on the outcome of
the resolution process.
This is crucial to ensure that the appellate body does not engage in a form of “second-
guessing” of the commercial wisdom of the creditors or the legitimacy of the
resolution process.
5. Limited Court Interference like in Arbitration Act
Sections 34 and 37 of the Arbitration and Conciliation Act, 1996, limit the scope of
judicial intervention in arbitration awards. A similar approach should be applied to the
resolution of insolvency cases under the IBC. Judicial intervention in resolution plans
should be limited and confined to very specific grounds, such as fraud, violation of
public policy, or material irregularities in the process.
The IBC should align its judicial review provisions more closely with the Arbitration
Act, limiting the scope of interference in an approved resolution plan. The courts
should not revisit the commercial decisions taken by the CoC unless there is a grave
error that materially affects the fairness and transparency of the resolution process.
This would expedite the resolution process, ensuring minimal disruption once a
resolution plan has been approved.

6.1 Overview of the chapter

The chapter provides conclusion of overall chapters taken up for research. It also
presents the theoretical and practical implications of the study. Further based on the
findings of the study, it provides certain suggestions which can be implemented by the
policy makers for making the CIRP more efficient and time bound. As all the other
studies this study has also has certain limitations which are highlighted in this chapter.
Based on literature and findings of the study the scope for future studies have also
been discussed in the chapter.
6.2 Theoretical & Practical Implications of the Study
Theoretically the study is a contribution in the literature of Indian Insolvency
laws as there are a very few studies regarding IBC. As the code is new, there are not
much studies which are done in this field. The doctrinal approach is adopted in the
study to gain an understanding of the Code and its operational efficiency.
  The study has analyzed the Corporate Insolvency Resolution Process and its
stage wise delay which will help the policy makers in identifying the delay
which happens at a particular stage of implementation and find out the
necessary action to be taken like amendments to be made in the Code so that
swift implementation within timeline can happen. Time is the essence of the
Code hence the policy makers should take note of nature of delays in the code.
 The study analyzed the financial implications of the code on the banks. In this
way the banks can assess their recovery procedure to be adopted as recovery
rate is high in IBC they can go for the same
6.3 Suggestions of the study
The significance of the study lies in its suggestions. The study identifies the stage
wise delay in the CIRP which can be of great help in modifying the code so that the
CIRP ends in the mandated timeline.
The following suggestions are made:-
The CIRP process should be initiated as early as possible as it would lead to
maximization of the asset value of the CD. The initiation of CIRP is a major aspect
which should be looked into.

Pre- package insolvency resolution should be started as it would help faster

resolution. From the study it was observed that there was significant delay in
receiving of resolution plans for revival of the corporates. This delay can be reduced
if the marketing of the stressed assets is done aggressively. For this IBBI should have
a department whose function would be to market the assets which have come under
CIRP.

The Resolution Professionals are not able to get full information regarding the
companies. In such cases, the Information Utilities should be more strengthened in
providing the information.
Non - cooperation by the Corporate Debtor should be penalized as is the case in
United Kingdom, Singapore and Hong Kong.
Lastly, major part of delay is in the approval by the Adjucating Authority. For this,
benches of Adjudicating Authority should be increased.
Limitations of the study
Given the scope of the study there have been very few researches on the subject. The
present study has following limitations. The first limitation is the sample size of the
study. The study is limited to only few companies. A larger sample may give a
different result. Further, the method is case study hence, it is difficult to generalize the
result. As the Code is new and is still evolving not much data about the code was
available for analysis at the time of start of study.
The study is based on secondary data. Secondary data has its own limitations. The
financial data of the companies have been taken from the audited balance sheet of the
companies and the information is taken from the online sources of the website of the
company, is presumed to be fair and true.
6.5
Future Scope of the study
This study invites researchers to benefit from the large sample study. This study used
a limited sample of three companies only. Hence, studies with larger sample size can
be undertaken to scrutinize the validity of the obtained results.
The level of financial distress was measured using the Altman Z Score model. Future
researchers can use other methods of measuring financial distress and arrive at a result
.
Future researchers can use a large sample size and study the timeline of the CIRP and
can generalize the result.
The future researchers can do a deeper study and analyze the stagewise delay in the
CIRP of the companies
6.6. Conclusion
IBC has been a game changer in Indian Insolvency regime. But there exists a gap
between the model timeline and the actual timeline in insolvency resolution. As per
the study, the CIRP process includes several stages of insolvency resolution, and each
stage has its timeline prescribed by the Code. The code has also mandated a strict
timeline of 270 days for the process to be completed but it can be observed from the
cases studies that it is not the case at the ground level. The model timeline is not been
adhered to. There are delays at various stages that need attention of both the regulator
as well as the legislature. As supported by literature, it is clear that delay in resolution
leads to deterioration in the value of the assets of the corporate debtor.
The study has also found out the financial implications of the CIRP on the recovery of
the banks where the performance of the Code was good except in the case of Alok
Industries Ltd., where there was nearly 83% of haircut for the banks. It was also found
out during the course of study that the cases had recovered much more than their
liquidation value through resolution which is the essence of the Code.
But there is other side of the coin also that the law is still in its evolving phase and is
evolving itself according to the current situation and as per the cases which are
coming. Timeline has been increased from initial 180 days to 330 days. Home buyers
are included in the list of financial creditors (FC). Financial Service Providers (FSP)
which were not included for the process are now included as DHFL has defaulted.
The Code has performed on the 12 large NPA cases as eight out of 12 cases have
resolution plans and total recovery is more than satisfactory in few cases which
otherwise would have been liquidated. After 2016, the code has been swift in making
changes and serious efforts have been made to collect and report data on operation of
the Code and this has provided a basis for thoughtful evaluation of the Code. Every
effort is being made to preserve the value of debtor’s asset to the benefit of creditors
IBC was introduced in 2016, and since then, an overall 8,308 corporate debtors have
been admitted, of which 61 per cent CIRPs have been resolved (either through a
successful resolution plan or withdrawal or liquidation) by end-March 2025. For these
cases, ICRA said, the limited recovery through the successful resolution plan has seen
an estimated rate of 33 per cent.

Quarterly realisation vs admitted claims for resolved cases. (Courtesy: ICRA)

Manushree Saggar, Senior Vice President and Group Head, Structured Finance
Ratings, at ICRA, said, “The IBC, despite its shortcomings, continues to deliver better
realisations for creditors over other recovery modes. Historically, resolutions from the
IBC have been plagued by long resolution timeframes, high share of liquidations and
sizeable haircuts.”
While FY2025 was positive with improved realisations, the overall resolution time
remains a cause for concern. Manushree Saggar added, “Almost 78 per cent of the
ongoing CIRP cases have exceeded 270 days, post admission by the NCLT, as on
March 31, 2025. Nevertheless, some of the recent judgments reinforce the need for
timely and transparent resolution, thereby putting greater onus on the Committee of
Creditors (CoC) and NCLT.”
However, she maintained that such rulings may also impact investor confidence in
stressed assets setting precedents that the decision made by the CoC and the NCLT
may be challenged and overturned by the judicial system, thus impacting the
effectiveness of the resolution process.
Per ICRA, prolonged delays and judicial interventions impact recovery for lenders
adversely and thus greater regulatory clarity and adherence of stakeholders to the code
is critical for its success.
Empirical data showed that when resolution plans succeed, about 33 per cent of the
money is recovered, which is much better than the 4 per cent recovery seen in
liquidation. This supported the higher recoveries in Q4FY25, as resolutions outpaced
liquidation orders during this period.
The record recovery in Q4FY25, ICRA said, was led by a few large cases (admitted
claims > Rs 1,000 crore) where 77 per cent recovery was achieved against the
admitted claims. These large cases had approximately 90 per cent share in recovery
but only 10 per cent share in approved resolution plans.
Thus, ICRA concluded that better recovery in large cases is key to making the
insolvency code work well. Also, to improve the efficiency of NCLT, especially since
it often gets stuck with small cases, it’s important to use special processes like the
Pre-packaged Insolvency Resolution Process (PPIRP), even though it hasn’t been
very successful yet.

Recovery trend seen in large cases (admitted claims > Rs. 1,000 crore) as % of
admitted claims. (Courtesy: ICRA)
According to ICRA’s analysis, the ratio of resolutions to liquidations improved to 0.9
in FY25 (1.9 in Q4), up from 0.6 in FY24. However, the average time for resolution
also increased to 713 days by March 31, 2025, compared to 679 days a year earlier,
which is significantly higher than the IBC deadline. To fix this, the Insolvency and
Bankruptcy Board of India (IBBI) made changes to the IBC in Q4FY25 to make the
auction and liquidation processes more efficient. These changes aim to standardize
asset sales, attract more bidders, and help creditors recover more money.

 1


Economy & Nation
India’s Insolvency and Bankruptcy Code (IBC/the Code) continues to shape borrower behaviour
positively and unlock recoveries for lenders, but the process remains fraught with delays and high
haircuts, reveals a detailed analysis by rating agency ICRA Ltd. The report, based on data till March
2025, offers a mixed picture of progress and structural hurdles within the country’s corporate
insolvency regime.

As per ICRA’s findings, financial creditors have realised Rs3.9 lakh crore through IBC cases since its
inception, while an additional Rs13.8 lakh crore was settled before admission into the national
company law tribunal (NCLT), highlighting the deterrent effect of the Code.
Recoveries Improve, Driven by Large Accounts
ICRA says FY24-25 marked a high point in terms of realisation against admitted claims, with recoveries
reaching about 70% in the fourth quarter (Q4), primarily due to resolutions of large-value accounts.
Despite this progress, average haircuts for lenders remain high at 67%, reflecting the value erosion
during prolonged resolution timelines.
Large accounts (claims exceeding Rs1,000 crore) comprised 89% of total recoveries, though they only
represented 14% of resolved cases. Realisations in these cases averaged 76% in Q4 of FY24-25,
showing the outsized role such accounts play in overall recovery metrics.

Resolution versus Liquidation: A Turning Point

In a notable shift, the rating agency says recovery through resolution plans outpaced that through
liquidation in Q4FY24-25 for the first time. The resolution-to-liquidation ratio reached a record 91% in
FY24-25, up from 59% in FY23-24 and just 25% in FY19-20. However, liquidation continues to account
for 43% of closed cases since 2016, although down from 48% four years ago.
Recoveries from liquidation remain dismal—just 5% in FY24-25, with large liquidation cases (claims
over Rs1,000 crore) showing haircuts of 94% on average. More than half of liquidation recoveries took
over three years to conclude, ICRA says.

Timelines Remain a Critical Concern

While realisations showed signs of improvement, the rating agency pointed out further deterioration
in resolution timelines. As of March 2025, the average duration of a corporate insolvency resolution
process (CIRP) reached 713 days, up from 679 days in March 2024—more than double the 270-day
deadline stipulated under the Code.
About 78% of ongoing CIRP cases have breached the 270-day threshold, underscoring systemic
bottlenecks, ICRA says. "Legacy cases—many over two years old—continue to clog the NCLT system
and diminish asset value. For defunct companies, recoveries were half that of active firms, reinforcing
the need for quicker resolution while businesses are still operational."

Pre-admission Settlements and Fewer New Filings

ICRA noted a sharp drop in new CIRP admissions—down to 724 in FY24-25 from 1,003 in FY22-24,
while pre-admission settlements surged, accounting for 87% of total cases disposed since 2016. This
trend indicates stronger deterrence, with more companies choosing to resolve defaults before formal
proceedings are initiated, it added.

Still, the rating agency says closures of existing cases have slowed, keeping ongoing CIRP caseloads at
around 1,900 for the third straight year. The government has responded by improving NCLT
infrastructure and appointing more tribunal members, though results are only beginning to
materialise.

Reforms by IBBI Aim To Accelerate Resolution

The Insolvency and Bankruptcy Board of India (IBBI) has taken several steps to reinvigorate the Code.
In January 2025, it mandated the use of the e-BKray auction platform for selling assets under
liquidation, aiming to increase transparency and buyer participation.

In May 2025, further regulatory amendments were introduced:

 Part-wise resolution: Allows resolution plans for either the whole company or individual
assets, encouraging faster resolution and higher bids.
 Priority payout rules: Dissenting financial creditors are to be paid on a pro-rata basis before
assenting creditors in staged payments.
 Enhanced role for interim finance providers: Interim financiers can now attend CoC meetings
as observers to improve funding decisions.
 Presentation of all plans: Resolution professionals must now present all received plans—
including non-compliant ones—to the committee of creditors.

These steps are intended to improve transparency, widen bidder interest, and reduce delays in
resolution, particularly for large and complex cases, ICRA says.

Sectoral Trends and Shifting Stress Areas

According to the report, the manufacturing sector continued to dominate in total IBC cases,
accounting for 37% of all admissions. "However, real estate and construction sectors saw a sharp
increase in FY25, contributing over 40% of new admissions and 28% of ongoing CIRPs. This signals
rising stress in construction-linked businesses amid funding and regulatory challenges."

Interestingly, ICRA says while wholesale and retail trade showed high liquidation ratios, the real estate
sector also led in pre-admission withdrawals, implying a greater willingness among promoters to
settle early.

While the IBC continues to be a powerful framework for improving credit discipline and facilitating
debt recovery, the effectiveness of the ecosystem still hinges on timely resolutions. High-value
recoveries and proactive settlements are encouraging signs, but delays, haircuts, and legacy burdens
remain structural impediments.

As India’s corporate insolvency regime evolves, stakeholders are looking to the IBBI’s ongoing reforms
and the government’s institutional push to deliver a more efficient and value-maximising insolvency
resolution framework.