Among large resolved cases, Jaiprakash Associates was resolved in 4QFY26 with admitted claims of Rs606 bn, delivering 23% recovery for creditors relative to claims and 89% of liquidation value.
FinTech BizNews Service
Mumbai, 6 September, 2026: The latest Kotak Institutional Equities report provides valuable insights on the banks and IBC.
The latest IBC data reinforces our view that the corporate credit cycle remains benign. With 177 cases admitted in 1QFY27, fresh stress formation remains broadly stable and in line with recent years. Resolution activity benefited from one large account during the quarter. Given strong corporate balance sheets, modest leverage and a capex cycle that is broadly funded through operating cash flows, we see little indication of near-term asset quality risks for lenders. The data continues to support a favorable corporate credit outlook for the sector.
Timelines and recoveries continue to limit IBC effectiveness
Nearly 76% of ongoing Corporate Insolvency Resolution Processes (CIRPs) have exceeded the 270-day threshold as delays in process completion continue to affect the processes. During 1QFY27, 177 CIRPs were admitted against 668 in FY2026, i.e., implying a run-rate broadly consistent with last year. Financial creditors initiated 116 of the 177, continuing the shift away from operational-creditor-led filings. Of the 156 CIRPs closed during 1QFY27, 69 resulted in approved resolution plans. IBC’s objective of time-bound resolution remains unmet, with ~1,500 resolved cases taking an average of 757 days. Recovery outcomes remain skewed—realizations stand at ~167% of liquidation value but only ~31% of admitted claims, reflecting significant haircuts. The resolution-to-liquidation ratio has improved steadily to an all-time high of 1.28, suggesting a swift shift recently toward resolution-led outcomes. Manufacturing remains the largest contributor, accounting for ~40% of admitted resolution plans. From a behavioral standpoint, OC-led cases tend to conclude via early settlements, whereas FC-led cases are more likely to proceed through resolution or liquidation. Positively, recent reforms aimed at faster admission (via IU records) and greater flexibility in structuring resolutions are expected to improve timelines and recovery outcomes at the margin.
Deep haircuts persist in large cases
IBC has cumulatively resolved ~Rs14 tn of debt, with creditors realizing ~Rs4.6 tn, implying recoveries above both fair value and liquidation benchmarks but still resulting in an overall haircut of ~70% to admitted claims. Among large resolved cases, Jaiprakash Associates was resolved in 4QFY26 with admitted claims of ~Rs606 bn, delivering ~23% recovery for creditors relative to claims and ~89% of liquidation value. IBC contributed Rs0.54 tn of the Rs1.04 tn total SCB recoveries in FY2025 (52.4%), with the IBC recovery rate improving to 37% from 28%.
Cases facing liquidation likely to stay high
Liquidation remains the most common path of closure for cases under the insolvency resolution process. As of June 2026, 76% of ongoing CIRPs are beyond 270 days, and 79% of ongoing liquidations are beyond two years. Cumulatively 3,074 CDs have gone to liquidation versus 1,484 resolutions, i.e., 42% of closures.
