Recoveries under India’s Insolvency and Bankruptcy Code showed signs of improvement in the April-June quarter of FY27, but persistent delays and high losses for creditors highlight ongoing challenges in the resolution framework.
CareEdge Ratings said recoveries under India’s Insolvency and Bankruptcy Code improved in the April-June quarter of fiscal 2027, even as lenders still took heavy losses. Financial creditors realised 28.6% of admitted claims in the quarter, up from 22.8% in the previous three months, but the average haircut remained steep at 71.4%. The rating agency said those recoveries were equal to 136.7% of liquidation value, underlining that resolution-led outcomes continue to outperform simple asset sales.
The gain was welcome, but the wider picture remained difficult. According to CareEdge, financial creditors recovered Rs 3,557 crore against admitted claims of Rs 12,443 crore in the quarter, while cumulative recoveries reached Rs 4.35 lakh crore, or 30.5% of admitted claims, by June 2026. The same data showed cumulative realisations at 166.6% of liquidation value, a sign that faster, successful resolutions can still preserve more value than prolonged distress.
Fresh insolvency filings also eased. CareEdge said new corporate insolvency resolution process admissions fell 5.3% from a year earlier to 177 cases in the quarter, with financial creditors accounting for 65.5% of those cases. The number of ongoing cases was broadly unchanged at 1,865 at June 30, 2026, compared with 1,885 at the end of fiscal 2026, suggesting closures were keeping pace with new admissions. Successful resolutions rose to 1,484 cases, or 16.2% of total admissions, while liquidation remained the most common outcome at 3,074 cases.
Delays continued to weigh on the framework. CareEdge said about 76% of active cases had been pending for more than 270 days, while the average resolution period had climbed to 757 days. Liquidation cases took an average of 540 days, and nearly 70% had been unresolved for more than two years. Manufacturing accounted for the biggest share of live cases, while manufacturing, real estate and construction together made up almost 70% of cumulative insolvency admissions, reflecting the pressure those sectors face from leverage, volatile cash flows and project execution risk. The report said recent amendments to the code aimed at improving transparency and efficiency could help, but faster execution will be needed to cut creditor losses meaningfully.
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