It has been more than two years since June 2017 when the RBI referred 12 cases that accounted for Rs 3.45 lakh crore of outstanding claims to IBC. A lot of insolvency experts had said that the fate of these 12 cases would decide the future of IBC.
Have these cases yielded the desired result that the IBC ecosystem was looking for?
Well, nine of the 12 of these large cases have seen a closure - seven have been resolved, and two have gone into the liquidation process - while three are still looking for some kind of closure.
The seven cases resolved include Bhushan Steel, Essar Steel and Bhushan Power and Steel. Together these seven cases accounted for Rs 2.14 lakh crore of outstanding claims. The resolution of these cases helped in the creditors recovering a total of Rs 1.02 lakh crore, or a recovery rate of 48 per cent, slightly better than the average recovery rate of close to 42 per cent across 156 cases resolved till 30 September 2019.
The resolution plans approved in Essar Steel India and Bhushan Power and Steel are under challenge before the Supreme Court and National Company Law Appellate Tribunal (NCLAT), respectively.
All the seven cases which saw resolution breached the then time limit of 270 days for resolution. Electrosteel Steels, which was the first of the large cases to be resolved, took 271 days. Bhushan Power and Steel, the last of the seven cases to be resolved, took more than two years.
The average time taken for resolution under IBC has been 374 days. The new time limit for completion of the resolution process is 330 days, which also includes litigation (if any) time.
One of the cases - Amtek Auto - was resolved but due to failure in implementing the approved resolution plan, the process has restarted. Amtek Auto was earlier acquired by Liberty House for Rs4,200 crore. However, after Liberty House failed to make the payments to the creditors, Amtek Auto's case has been again referred to the National Company Law Tribunal (NCLT) for a fresh start of the IBC process.
Two of the cases - Era Infrastructure and Jaypee Infratech - are yet to see any kind of resolution.
Closure of Jaypee Infratech is of paramount importance as it involves the fate of homebuyers. Apart from that, a final decision in this case would help settle the insolvency laws with regards to cases involving real estate companies.
Lanco Infratech and ABG Shipyard could not find a buyer and hence have been ordered to be liquidated. The liquidation process is on.