More number of insolvency cases and more recoveries from them. That is what the latest data shows as recoveries have increased to 30.6% in the first quarter of the current fiscal compared to 26% in the year-ago period.

The number of insolvency cases filing/admission have similarly gone up by 23.5% during this period, according to an analysis by Care Ratings.

Total admitted claims of financial creditors rose from Rs 6,84,901.3 crore in March 2022 to Rs 7,67,384.9 crore in June.

The liquidation value of these cases remained more or less the same at Rs 1,31,447.9 crore and Rs 1,31,468.6 crore, respectively.

Realisable value of financial creditors (FCs) increased from Rs 2,25,293.8 crore to Rs 2,35,093.6 crore which is 32.9% and 30.6%, respectively.

The overall recovery rate till Q1FY23 was 30.6%, up from the earlier rate of around 26%,  Care Ratings said in an analysis.

The cumulative recovery rate, however, has fallen from 43% in Q1FY20 and 32.9% in Q4FY22 as larger resolutions have already been executed and a significant number of liquidated cases were either BIFR cases and/or defunct, the agency said.

The number of cases admitted for corporate insolvency resolution has been increasing each quarter since the launch of the Insolvency and Bankruptcy Code in 2016. After a dip in FY21 and FY22, the admission rate has increased in Q1FY23 by 23.5%.

The actual number of cases admitted, however, continues to be lower compared to earlier quarters of fiscals 2019 and 2020.

Quoting data from the Insolvency & Bankruptcy Board of India (IBBI), the report said the number of cases admitted rose steadily from 992 in Q1FY19 to 4,565 in Q1FY22 and further to 5,304 in Q4FY22 and still higher at 5,636 in Q1FY23. 

Of these 2,883 cases were filed by financial creditors and 2,412 cases by operational creditors. The trend of share of financial creditors increasing and that of operational creditors decreasing continued in the reporting June quarter. The share of corporate debtors has continued to remain the smallest over the same period.

The report, authored by Care Ratings senior director Sanjay Agarwal and his team, said that while the share of the various sectors has largely remained constant compared with the previous period, the manufacturing sector accounts for the highest at 40% of the overall cases. This is followed by real estate (21%), construction (11%) and trading sectors (10%). 

In case of completion/resolution, there has been a minor dip in Q1 FY23 to 30% of 5,632 cases admitted from 31% of the 5,258 admissions in Q4FY22. Of the total 5,632 cases admitted at the end of June 2022, only 9% have ended in approval of resolution plans, while 35% remain in the resolution process as against 37% as of the end of June 2021; and 1,703 or 30% of the total have ended in the liquidation of which 76% were either BIFR cases and/or defunct.

Around 14% (774 cases) have been closed on appeal /review /settled, and 11% have been withdrawn under Section 12A of which 54% were less than Rs 1 crore, and the primary reason for withdrawal is either full settlement with the applicant which has increased to 41.5% or other settlement with creditors (22.8%).

The overall recovery rate till Q4FY22 reached 32.9%, significantly higher than the earlier recovery rate of 26%, but down 49.2% in Q2FY22. 

Of the 1,999 ongoing cases, there has been a delay of over 270 days in 61% of cases as of June 2022, an improvement of 14% from 75% in June 2021. The less than 90 days delayed cases are the second largest, while the other two categories continue to have quite a few cases. 

As much as 49% of cases gone for liquidation are pending for more than two years and another 27% cases are pending for more than one year.