285 companies were the subject of bankruptcy proceedings in the first two quarters of fiscal 2022, according to Ibbi data

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In the six months ending September 2021, lenders took 285 companies to the National Company Law Tribunal (NCLT) after the one-year moratorium on bankruptcy proceedings was lifted in March 2021. In the quarter July-September, 144 companies were driven to bankruptcy. court, according to the latest data from the Insolvency and Bankruptcy Board of India (IBBI).

The report reveals that 4,708 companies have so far faced bankruptcy proceedings. Of these, 40 percent belong to the manufacturing sector and 20 percent to the real estate industry.
An analysis of the data showed that the maximum number of bankruptcy cases (up to the end of September) was initiated by operational creditors (2,397 cases), followed by financial creditors (2,019 cases) and debtor companies (291 cases). ). The data indicates that the number of cases of lenders who took companies to the regulator for default increased after March 2021, when the one-year moratorium (given in the wake of the COVID-19 pandemic) on bankruptcy actions was lifted.
According to experts, the number of distressed businesses that have defaulted to their creditors could be much higher, as lenders are often reluctant to initiate bankruptcy proceedings against the failing business until they attract bankruptcy. new investors. Another reason that lenders do not declare a business in default is the sharp reduction in the declared value of an asset that many creditors accept as part of bankruptcy resolution. This concern was also expressed by a standing parliamentary committee in August.

The data also reflects another trend whereby companies with more physical assets are managing to attract offers from investors even if their post-acquisition business turnaround efforts do not materialize.

Meanwhile, the IBBI has stressed the need for a strong bankruptcy resolution in the country. “While banks are reeling from the increase in non-performing assets (NPAs), the need of the hour is to have a well-developed distressed asset market to effectively offload these NPAs,” the NPA said. IBBI.


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