Out of the 20,000 applications for initiation of corporate insolvency resolution process (CIRP), 16,000 applications were resolved before admission, Sahoo said during a virtual conference hosted by the National Law University Delhi on Thursday.
“A firm makes all possible efforts to settle to prevent filling of applications for initiation of CIRP and even after the application is filed, it tries hard to resolve the stress to avoid admission,” Sahoo said, adding, “It continues efforts to resolve stress midway, through settlement, review, mediation or withdrawal to avoid consequences of CIRP.”
As per official data available until September last year, from the remaining 4,008 cases that were admitted into the CIRP, 1,942 cases were on going, while 764 cases were resolved midway through settlement, review, mediation or withdrawal with the balance 1,302 completing the process.
About 300 out of these 1,300-odd cases resulted in approved resolution plans with around 1,000 cases proceeding to liquidation, Sahoo said, adding, “So one may work out, 300 upon 1,300 to find a rescue rate of 25% of CIRP.”
“But one can also work out the number of companies where stress was resolved before admission, midway and through resolution plans as a percentage of the number of applications concluded, then we get a rescue rate of 95%,” he said.
Further, while the rescue rate for CIRPs stood at 25% in terms of the number of companies, the rescue rate under the IBC was 75% in terms of value of assets that saw resolution, Sahoo said.