IBC: Lenders, Vendors Recover Nearly Half The Claims In 88 Insolvency Cases

Nearly half of the total admitted claims worth over Rs 1.42 lakh crore have been recovered by financial and operational creditors from as many as 88 debt-ridden companies under the insolvency law.

Claims totalling a little over Rs 1.42 lakh crore were admitted in 88 cases under the Insolvency and Bankruptcy Code till Feb. 28, data collected by the Insolvency and Bankruptcy Board of India showed. Lenders sought to recover dues worth Rs 1.36 lakh crore and vendors Rs 6,469 crore.

Financial creditors recovered 48.24 percent (Rs 65,635 crore) of their admitted claims and operational creditors got 48.41 percent (Rs 3,131 crore) of their admitted claims.

The insolvency code seeks to provide market-determined resolution for stressed assets in a time-bound manner. The IBBI, a key institution set up under the IBC, provided the figures in an affidavit submitted to the National Company Law Appellate Tribunal last week.

On March 27, the tribunal directed the IBBI to file an affidavit, with details about average percentage of distribution of realised amount between financial creditors and operational creditors subsequent to insolvency resolution process.

The NCLAT had asked IBBI to give data in the resolution process of Essar Steel Ltd., where operational creditors and some financial creditors are opposing the resolution plan approved by the Committee of Creditors and are seeking a higher share. ArcelorMittal, the successful resolution applicant, would pay Essar Steel lenders Rs 41,987 crore for their total dues of Rs 49,395 crore. Operational creditors would get only Rs 214 crore against Rs 4,976 crore outstanding.

In the 88 insolvency cases completed so far, financial creditors got 100 percent realisation of admitted claims in 11 resolution plans, while operational creditors got full realisation in only six cases. In three cases, financial creditors got more than 100 percent realisation of admitted claims.

Among the 88 cases were big-ticket takeovers, including Tata Steel Ltd. acquiring over Bhushan Steel Ltd. and Vedanta Ltd.’s acquisition of Electrosteel Steels Ltd.

In the Bhushan Steel matter, total admitted claims of operational and financial creditors amounted to Rs 57,505 crore. Of this, financial creditors received 63.49 percent of claims, while the operational creditors’ realisation stood at 80.94 percent.

With regard to Electrosteel, total admitted claims for both financial and operational creditors were Rs 13,958 crore. In this resolution process, in which Vedanta group got control of the company, financial creditors got 40.38 percent of admitted claims, while the operational creditors’ share was nil.

In the matter of Monnet Ispat & Energy Ltd., total admitted claims were Rs 11,478 crore, of which financial creditors got 26.26 percent and operational creditors received 5.40 percent.