Lenders now dominate filing of firms’ bankruptcy

The law pivots from trade recovery to lender-led restructuring.

- Gireesh Chandra [e-mail]

Financial creditors are now leading the charge at bankruptcy tribunals, overtaking the vendors and service providers who once dominated filings under the Insolvency and Bankruptcy Code (IBC).

The shift marks a turning point in how the law is being used: less as a pressure tactic for trade dues recovery and more as a lender-driven restructuring framework.

Data from the Insolvency and Bankruptcy Board of India (IBBI) shows banks and other financial creditors made for 47% of cases admitted between April and December, compared with 33% by operational creditors. The rest were initiated by the companies themselves.

In the December quarter, the difference is starker: 67% of the cases were initiated by financial creditors and 30% by operational creditors. This is huge variance with the average of 44% by financial creditors and 43% by operational creditors in FY17-25, the data showed.