Insolvency Resolution Process Continues To Steadily Chug Along: CareEdge

CareEdge Research Report

The overall recovery rate till Q4 FY24 was 32.10% implying a haircut of approximately 68%. The cumulative recovery rate has been on a downtrend, decreasing from 43% in Q1 FY20 and 32.06% in Q1 FY25 as larger resolutions have already been executed and a significant number of liquidated cases were either BIFR cases and/or defunct with high-resolution time.

However, a measure of the effectiveness of the code is the ratio of resolution to liquidation.

With several initiatives to improve outcomes, the ratio has improved from 0.21 in FY18 to 0.71 in Q1 FY25. The average time taken for resolution or liquidation continues to increase for operational creditors and financial creditors during the June quarter.

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