124 Companies slip into liquidation despite theoretical resolution plans

The Indian banks, despite having resolution plans, have let 124 businesses fall into liquidation. Of the 914 companies whose insolvency ended at the end of March, only 14% ended up with a resolution plan. Although about 57% of those businesses ended up with liquidation orders.

The Insolvency and Bankruptcy Code has sent 396 firms, the highest in any category, to liquidation. Of these, more than 200 were real estate and building companies and 117 were retail and wholesale companies.

liquidation

Last week, Finance minister Nirmala Sitharaman had announced a complete freeze on fresh insolvency cases for up to a year. Also, any loan related to the ongoing pandemic would not be included in the definition of default.

For the gain of MSMEs, the minimum threshold for initiating insolvency proceedings was also increased to Rs 1 crore from the previous Rs 1 lakh.

Experts assume that banks would be forced to be more flexible with stressed accounts in the absence of the IBC.

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