The insolvency petition of Go First Airlines before the National Company Law Tribunal (NCLT) has again brought the six-year-old Insolvency and Bankruptcy Code (IBC), a marquee legislation for the resolution of high-value bankruptcy cases, in the spotlight.
Jet Airways was the major airline dragged to the bankruptcy court under the IBC in 2018, which has led to an almost liquidation of the airline and a massive haircut of over ₹8,000 crore debt for lenders, not counting the withdrawal of a big airline for service, job loss to over 25,000 and high airfares for years for travellers.
Against this backdrop, Go First bankruptcy is a litmus test for the IBC, where the mechanism can break away from its historical trend of taking over 400 days to resolve cases and deliver a swift resolution. More often than not, IBC rulings have led to liquidation rather than revival, largely due to the considerable time lost during the process.
THE STATUS
The implementation of the IBC in 2016 aimed to reshape the credit culture in India by establishing a time-bound resolution process that favoured creditors. However, the actual outcomes under this framework have fallen short of expectations.
As of March ‘23, a total of 6,571 cases were admitted under the IBC, nearly half of these cases being initiated by operational creditors, which mainly comprise small and medium enterprises seeking to recover dues from larger companies.
Among the admitted cases, 4,515 have been closed, with proceedings ongoing in the remaining. About 45% of the closed cases ended up in liquidation, while the rest were either resolved, withdrawn, or appealed.
This story is from the July 2023 edition of Beyond Market.
Start your 7-day Magzter GOLD free trial to access thousands of curated premium stories, and 8,500+ magazines and newspapers.
Already a subscriber ? Sign In
This story is from the July 2023 edition of Beyond Market.
Start your 7-day Magzter GOLD free trial to access thousands of curated premium stories, and 8,500+ magazines and newspapers.
Already a subscriber? Sign In
Young Or Old? Find Your Ideal Health Plan
Age doesn't define you: find your ideal health coverage at any stage! Choose individual or family plans that fit your needs
IMPORTANT JARGON
The phase-wise voting in India for general elections began on 19th April.
BACK IN BUSINESS
Buoyed by post-pandemic travel trends and rising disposable incomes, India's hotel industry is expected to maintain its growth momentum, going forward
SCOOPING UP SUCCESS
Investments are hot, but innovation and competition are the next scoops to conquer for ice cream companies
DIG DEEPER
Investors chasing high-growth should prioritize near-term EPS explosion to justify high PE ratios, but also verify long-term business health and management before taking the plunge
SOARING AMBITIONS
Bolstered by cost advantages and government support, India's Electronics Manufacturing Services industry sets its sights on a $100 billion slice of the global market by 2026
TARGET IN SIGHT
Government policies and private sector involvement have propelled India's defence exports to new heights, putting the seemingly ambitious $5 billion target firmly within reach
PLAYING THE LONG GAME
Small and mid-cap surge in India raises regulatory concerns, but long-term investors with risk strategies may benefit from these volatile stocks given positive economic and interest rate forecasts
MAGNIFIED PRESSURE
While the asset quality of banks is anticipated to remain largely stable, challenges persist in the form of mobilizing deposits and peaking profitability
OPPORTUNITY KNOCKS, BUT CHALLENGES AWAIT
INDIA'S BOOMING PE MARKET ATTRACTS INVESTMENTS IN CONSUMER AND INFRASTRUCTURE, BUT CHALLENGES LOOM. CAN FIRMS PRIORITIZE VALUE CREATION TO NAVIGATE THE RISKS?
