Rs 7.3 trn debt settled before initiating insolvency: Economic Survey

However, concerns have lately been raised over declining rates of recovery in comparison to their claims admitted through the IBC mechanism, resulting in large haircuts for lenders

Subrata Panda Mumbai
gavel, IBC, Insolvency, bankruptcy, court, judgement, laws

The Insolvency and Bankruptcy Code (IBC) has managed to bring about a change in the debtor-creditor relationship, with the fear of losing control over  one's enterprise nudging thousands of debtors to settle their dues with their creditors so that their company is not pushed into insolvency proceedings, the Economic Survey of 2022-23 has observed.
Data shows, up until H1FY23, as many as 23,417 applications for initiating the corporate insolvency resolution process (CIRP) of corporate debtors having underlying defaults of Rs 7.3 trillion were disposed of before their admission into CIRP.
“One of the far-reaching spill-over effects of the Code has been the behavioural change effectuated by it among debtors. The fear of losing control over the CD upon initiation of CIRP has nudged thousands of debtors to settle their dues even before the initiation of insolvency proceedings,” the Economic Survey noted.

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First Published: Jan 31 2023 | 4:14 PM IST

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