Claims on dubious pre-IBC deals swell

At ₹4 tn, amount matches entire sum recovered via IBC in 10 yrs

- Gireesh Chandra Prasad

While creditors handhold bankruptcy resolution and recover debt from rescue packages, dubious pre-bankruptcy deals are building up a mountain of claims in the background.

Creditors’ claims on shady transactions done right before bankruptcy admission are approaching ₹4 trillion, data from the insolvency regulator showed, matching what they have so far realized through bankruptcy courts in the last 10 years.

Banks are trying to reverse ₹3.97 trillion worth of questionable transactions executed by former promoters and executives before companies formally entered bankruptcy proceedings, latest data from the Insolvency and Bankruptcy Board of India (IBBI) showed. The amount compares with the ₹3.99 trillion that creditors actually recovered through debt resolution or settlement since the inception of Insolvency and Bankruptcy Code (IBC) in 2016. In the September quarter alone, 128 such claims seeking reversal of transactions to recover close to ₹7,200 crore were filed in the bankruptcy courts. Since September 2024, over ₹20,700 crore of such claims have been filed.

The data highlights an aggressive pursuit by lenders to claw back funds and maximize the resources available for bankruptcy rescue. However, the recovery rates point to the difficulty on the ground - creditors could recover only ₹7,931 crore from 368 transactions till March 2025, out of the 1,396 petitions filed before tribunals. At the end of September, 1,570 cases were filed.