Bankruptcy: Creditors recover nearly half of total claims

The total admitted claim of financial creditors of these 88 companies stood at Rs 1.3 trillion, of which they recovered Rs 65,635 crore.

Illustration: Dominic Xavier/

Of the total admitted claims of Rs 1.42 trillion in the 88 companies that have undergone successful Corporate Insolvency Resolution Process (CIRP), about Rs 68,766 crore has been realised by the claimants, including operational and financial creditors, an affidavit by the Insolvency and Bankruptcy Board of India (IBBI) shows.

The said affidavit by the IBBI had been filed at the National Company Law Appellate Tribunal (NCLAT).

The numbers in the affidavit contain data until February 28. Business Standard has seen a copy of the affidavit.

During a hearing in the ongoing CIRP of Essar Steel India Limited, the appellate tribunal had on March 27 asked the IBBI to submit the details of the average distribution of funds between operational and financial creditors of various companies that had successfully undergone the debt resolution process under the IBC.

The total admitted claim of financial creditors of these 88 companies stood at Rs 1.3 trillion, of which they recovered Rs 65,635 crore.

Operational creditors, on the other hand, had made claims of Rs 6,469 crore, of which they recovered Rs 3,131 crore, the data on the affidavit shows.

Business Standard had earlier reported that for financial creditors of these 88 firms, realisation as percentage of their admitted claims stood at about 48.24 per cent.

The realisation as percentage of their admitted claims for operational creditors stood at 48.41 per cent, while the total realisation by both financial and operational creditors in these companies stood at 48.25 per cent.

Other than the 88 cases that have undergone successful CIRP, 70-75 cases have been withdrawn under Section 12(A) of the Act as the corporate debtor agreed to pay the entire debt and take their company out of insolvency.

Thousands of cases have been withdrawn after creditors took companies to the National Company Law Tribunal (NCLT), but before they were even heard or admitted, as the corporate debtors reached some settlement with the lenders by paying the debts, IBBI chairman M S Sahoo had then told Business Standard.

Big ticket names such as Bhushan Steel, Electrosteel Steel, Monnet Ispat and Energy, Amtek Auto, and Binani Cements also figure in the list of these 88 companies.

Bhushan Steel, the largest company till date to have undergone successful CIRP, saw total admitted claims worth Rs 57,505 crore, of which the admitted claims of financial creditors stood at Rs 56,022 crore.

The financial creditors managed to recover Rs 35,571 crore, which was roughly 63.5 per cent of their admitted claims.

Operational creditors of Bhushan Steel had a slightly better deal as they managed to recover nearly Rs 1,200 crore against their admitted claim of nearly Rs 1,483 crore, thereby making nearly 81 per cent recovery.

The company, which was admitted to insolvency by the Principal Bench of NCLT at New Delhi, took nearly 290 days to be resolved at the first level.

Other companies such as Binani Cements took nearly 500 days, while Electrosteel Steel took 286 days to be resolved at NCLT level, according to the data in the affidavit.

The IBBI chairperson had earlier defended the time taken for CIRP under the Insolvency and Bankruptcy Code (IBC), saying it took on an average 300 days compared to 5-8 years taken under the process prescribed by Board for Industrial and Financial Reconstruction (BIFR).

“One has to look at the IBC process in comparison with the previous regime under the BIFR.

“If you look at the cost of resolution process, it is 0.5 per cent of money realised, but in BIFR, the cost was 9 per cent. In terms of the time taken under the IBC, it takes on an average 300 days to resolve the cases,” Sahoo had told Business Standard.

Of the 88, financial creditors have moved insolvency applications in 47 companies, while operation creditors have taken 23 such defaulting companies to the NCLT under the IBC.

The other 18 insolvency cases have been moved by the corporate debtors themselves, the data on the affidavit shows.

The Kolkata bench of the NCLT remained the busiest as it disposed of 23 cases of successful CIRP, while the Mumbai and Chennai benches of the tribunal disposed of 18 and 14 successful CIRP cases, respectively.

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