Page 179 - economic_survey_2021-2022

Monetary Management and Financial Intermediation 153

> 270 days ≤ 1 year 80
> 180 days ≤ 270 days 156

> 90 days ≤ 180 days 74
≤ 90 days 56

Source: IBBI 2021
Note: *This excludes 12 cases where liquidation order has been set aside by NCLT / National Company Law
Appellate Tribunal (NCLAT) / HC / SC;
# This includes cases where an application for early dissolution has been filed with the NCLT;
** This includes 3 cases where CD has been sold as a going concern, however, submission of Final Report is awaited.
(c) Time and cost

4.60 The 421 CIRPs, which have yielded resolution plans by the end of September 2021 took on
average 428 days (after excluding the time excluded by the Adjucating Authority) for the conclusion
of the process. Out of this, the cost details are available in respect of 388 CIRPs. The cost works out
on average to 0.98 per cent of liquidation value and to 0.54 per cent of resolution value.
4.61 The 1419 CIRPs, which ended up in orders for liquidation, took on average 375 days.
Further, 264 liquidation processes, which have closed by submission of final reports took on
average 427 days for closure.

(d) Behavioural Change

4.62 Distressed assets have a life cycle and their value gradually declines with time. The fact
that a CD may change hands has changed the behaviour of debtors. Thousands of debtors are
resolving distress in the early stages of distress, either when the default is imminent, on receipt
of a notice for repayment but before filing an application, after filing the application but before
its admission, and even after admission of the application, and making best effort to avoid
consequences of the resolution process. Till September 2021, 18,629 applications for initiation
of CIRPs of CDs having underlying default of `5,89,516 crores were resolved before their
admission. Further, a total of 527 CIRPs have been withdrawn under section 12A of the Code
until September 2021. Almost three fourth of these CIRPs had claims of less than `10 crores and
701 CIRP cases have been closed on appeal/ review/settled.
IBC and pre-packaged insolvency resolution process for corporate MSMEs

4.63 The provision of multiple competing options for the resolution of stress makes an economy
a great place to do business. In line with this thought, the Insolvency and Bankruptcy Code,
2016 was amended through an Ordinance on April 4, 2021, to provide for a Pre-Packaged
Insolvency Resolution Process (PPIRP) for corporate Micro, Small and Medium Enterprises as
an alternative insolvency resolution process to ensure quicker outcomes.

4.64 PPIRP has the rigour and discipline of the CIRP. It is informal up to a point and formal
thereafter. It blends debtor-in-possession with creditor-in-control. It is neither a fully private nor
a fully public process - it allows the company, if eligible under section 29A, to submit the base
resolution plan which is exposed to challenge for value maximisation. It safeguards the rights of
stakeholders as much as in CIRP and has adequate checks and balances to prevent any potential
misuse. This process entails a limited role of the courts and insolvency professionals (IPs).