The Centre has said that process is still underway for as many as 1,999 corporate insolvency cases under IBC as of end June 2022, of which only 436 were in the real estate sector.
In 2021-22, as many as 210 applications pertaining to the real estate sector were admitted to the Corporate Insolvency Resolution Process (CIRP). Of these, 18 were resolved, 60 cases have been settled or withdrawn, 63 cases were ordered for liquidation and for the remaining cases, the process is still underway, Rao Inderjit Singh, Minister of State for Corporate Affairs has said.
In a written reply to a Lok Sabha question on Monday, Singh also said that during the Covid-19 pandemic period, there had been a “general slowdown in the distressed assets market”. He was replying to a question on the details of resolution in the real estate sector and whether the progress on resolutions under the IBC framework of some of the housing projects has been slow.
Market driven process
Insolvency resolution process for any corporate debtor (CD) is conducted as per the provisions of the Insolvency and Bankruptcy Code (IBC) and rules/regulations made thereunder.
The CD undergoing CIRP is resolved through a resolution plan formulated by resolution applicants based on the market driven process. The committee of creditors within its commercial wisdom assesses the feasibility and viability of the resolution plan submitted by the proposed resolution applicant which is then approved by the Adjudicating Authority.
Further, the time taken for resolution depends on several factors including the nature of business, business cycles, market sentiments and marketing effort.
Implementation of Code The Government has a regular mechanism available to monitor and strengthen the implementation of the Code through the Insolvency Law Committee, constituted under Chairmanship of MCA Secretary, which makes recommendations to the Government on issues arising from functioning and implementation of the Code as well as on the recommendations/representations received from various stakeholders.
Recently, insolvency regulator Insolvency and Bankruptcy Board of India (IBBI) made changes in regulations to facilitate submission of additional documents with application for CIRP to ease the admission process.