Steel sector is the biggest defaulter under Insolvency and Bankruptcy Code

Of the 525 cases with total underlying default of ₹1,28,810 crore so far admitted under the Insolvency and Bankruptcy Code (IBC), the steel sector is the single-biggest defaulter in terms of both number of defaulting corporates (45) and total underlying default (₹57,001 crore).

Within the steel sector, corporate insolvency resolution process (CIRP) is on in the case of 39 corporates, resolution plan has been approved in the case of two, and liquidation order has been passed in the case of three. One case has been closed by appeal/review.

The steel sector is followed by the retail industry, with total underlying default aggregating ₹12,719 crore involving 12 corporates.

As per the Economic Survey’s sector-wise analysis (based on data from the Insolvency and Bankruptcy Board of India) of admitted cases under IBC, the other sectors accounting for large underlying default include: capital goods — non-electrical equipment (17 corporates with total underlying default aggregating ₹4,785 crore); textiles (33 corporates, ₹4,679 crore); trading (39 corporates, ₹4,560 crore), chemicals (19 corporates, ₹4,433 crore), shipbuilding (two corporates, ₹4,292 crore), and construction (40 corporates, ₹4,004 crore).

Further, the insolvency process has been invoked in the case of sectors such as computer education (one corporate, ₹2,909 crore), and mining and mineral products (13 corporates, ₹2,700 crore). In the ‘others’ category, there are 304 corporates with aggregate underlying exposure of ₹26,727 crore.

According to the Survey, the new code has provided a resolution framework that will help corporates clean up their balance sheets and reduce their debts.

Since IBC was passed in May 2016, there has been a significant amount of progress – the entire mechanism for the Corporate Insolvency Resolution Process (CIRP) has been put in place, said the Survey.

It elaborated that “a number of rules and regulations have been notified to create the institutions and professionals necessary for the process to work. A large number of cases have entered the insolvency process, and a few have even exited the process.”

Over 1,300 insolvency professionals are registered (under three Insolvency Professional Agencies), the Survey said and added that the first information utility has also started functioning.

“Over 525 cases of corporate insolvency have been admitted across all the National Company Law Tribunal (NCLT) benches. In addition, 108 voluntary liquidation proceedings and one fast-track corporate insolvency resolution have also been initiated,” it said.

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