The outbreak of COVID-19 pandemic and the suspension of new proceedings under the Insolvency and Bankruptcy Code, 2016 (IBC) has resulted in a sharp slow-down in resolution process and consequently, the realisation for financial creditors has declined.
During first half of the current fiscal, number of cases admitted declined by 82 per cent i.e. 161 cases compared to 889 cases in the first half of the Financial Year 2019-20.
Due to suspension of new proceedings under the IBC, financial creditors may realise just Rs 60,000-65,000 crore in the current fiscal through successful resolution plans from the Insolvency and Bankruptcy Code, 2016, as compared to about Rs 1 lakh crore in the last financial year 2019-20, registering a decline of up to 40 per cent. Moreover, realisations for financial creditors could continue to suffer in the Financial Year 2021-22 due to suspension of fresh insolvency proceedings till December 25, 2020, for accounts which defaulted after March 25, 2020, which be extended by three more months.