Overall recovery under IBC just 32.8% of total admitted claims, finds Parliamentary panel
A Parliamentary panel has expressed concern over the recovery of just around 33 per cent of the total admitted claims under the Insolvency and Bankruptcy Code (IBC). It called for measures to improve the insolvency law framework, such as putting in place an advance ruling mechanism.
“The Committee noted that while creditors realise 170.1 per cent of the liquidation value, the overall recovery is only 32.8 per cent of the total admitted claims, indicating a significant shortfall largely due to firms entering the IBC when assets are already heavily stressed,” the Standing Committee on Finance said in a report tabled in the Parliament on Tuesday. It recommended that to reduce ‘haircuts’, the process for competitive bidding be expanded through global outreach to enhance competition.
Under the IBC, as on March 31, 2025, 1,194 companies have been successfully resolved and creditors have realised ₹3.89 lakh crore. This realisation is more than 32.8 per cent of the admitted claims and more than 170.1 per cent of the liquidation value. Resolution plans, on an average, are yielding 93.41 per cent of fair value of the corporate debtors.
The committee recommended setting up a transparent, online mechanism for issuing ‘no dues’ certificates and statutory clearances immediately upon completion of a resolution plan to ensure that revitalised corporate debtors truly start with a clean slate. IBC came into force in 2016. The government has proposed various amendments to the IBC, which provides for a time-bound and market-linked resolution of stressed assets.
“The committee, therefore, recommends that the Ministry of Corporate Affairs and the IBBI urgently explore the feasibility and applicability of introducing a suitable advance ruling mechanism within the IBC framework. This mechanism should aim to provide stakeholders with pre-admission clarity on key legal or factual issues, thereby significantly reducing unnecessary litigation and safeguarding the time-bound nature of the resolution process,” the report said.
Other suggestions
Other suggestions made in the panel’s report on ‘Review of Working of Insolvency and Bankruptcy Code and Emerging Issues’ include expediting the establishment of additional NCLT (National Company Law Tribunal) benches as well as accelerating the operationalisation of the proposed Integrated Technology Platform (iPIE) for centralised case management.
The iPIE will help strengthen the capacity and efficiency of the NCLT and NCLAT (National Company Law Appellate Tribunal). “To deter vexatious challenges, the Committee further recommends that the IBBI prescribe a mandatory upfront threshold deposit for unsuccessful resolution applicants filing appeals, and the minimum penalty for frivolous applications should be substantially raised,” the report said.
Reconsidering the eligibility criteria for home buyers in the insolvency resolution process, making changes in the waterfall mechanism and evolving a “less-complicated procedural set-up” to help distressed MSMEs, are among the recommendations. Waterfall mechanism pertains to the priority of claims during liquidation.
According to the committee, early intervention in stressed cases should continue to be promoted to preserve enterprise value, and that once a resolution plan is approved by the NCLT, its implementation should be prompt and monitored, with clear provisions to penalise non-compliance and ensure maximum recovery for all stakeholders.
Published on December 2, 2025
