IBC Resolution Time at NCLT Extends to 716 Days in Fiscal Year 2023-24

The average duration for resolving insolvency cases at the National Company Law Tribunal (NCLT) was 716 days in the last fiscal year, surpassing the 654 days recorded in 2022-23, according to official data. The corporate affairs ministry provided this information to Rajya Sabha on Tuesday.

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In 2021-22, the average time for resolution was 557 days, with the realisable amount compared to admitted claims standing at 23%. The Insolvency and Bankruptcy Code (IBC) stipulates a resolution time of 330 days, including litigations.

Resolution Time and Realisable Amount

For the fiscal year 2023-24, the average resolution time was 716 days. The percentage of realisable amount to admitted claims was 27%, as per Minister of State for Corporate Affairs Harsh Malhotra's written reply. In contrast, the previous year saw an average of 654 days with a realisable amount percentage of 36%.

The government has amended the IBC six times since its inception in 2016. During the financial year 2023-24, there were 12 amendments to various regulations and model bye-laws, resulting in about 86 changes to strengthen the insolvency resolution process.

Pending Cases and Legal Proceedings

As of June 30, 2024, data from the Insolvency and Bankruptcy Board of India (IBBI) indicated that there were 1,973 ongoing corporate insolvency resolution processes. Out of these, 1,249 cases exceeded the stipulated 330-day timeline. This timeline excludes extensions granted by NCLT and time spent on legal proceedings related to the resolution process.

Minister Malhotra noted that the increase in resolution time is due to associated litigation from a higher number of interlocutory applications. In another written reply, he mentioned that as of June 30, 2024, there were 19,770 cases pending before NCLT. Of these, 10,125 cases had been pending for more than a year.

National Company Law Appellate Tribunal (NCLAT)

At the end of June this year, there were also 3,019 cases pending before the National Company Law Appellate Tribunal (NCLAT). Out of these, 1,356 cases had been pending for over a year.

The ongoing delays highlight challenges within the insolvency resolution framework. Efforts continue to streamline processes and reduce backlogs to ensure timely resolutions.