Financial, operational creditors recover nearly half of total claims in 88 insolvency cases

Nearly half of their total admitted claims worth over Rs 1.42 lakh crore have been recovered by financial and operational creditors from as many as 88 debt-ridden companies under the insolvency law, according to official data. The Insolvency and Bankruptcy Code (IBC) seeks to provide market-determined resolution for stressed assets in a time-bound manner. Claims totalling a little over Rs 1.42 lakh crore were admitted in 88 cases under the IBC till February 28, data collected by the Insolvency and Bankruptcy Board of India (IBBI) showed.

Of the total admitted claims, financial creditors sought to recover dues worth Rs 1.36 lakh crore and operational creditors Rs 6,469 crore. Financial creditors recovered 48.24 per cent of their admitted claims and operational creditors got 48.41 per cent of their admitted claims. The figures are with respect to 88 cases, including those where resolution has been completed, for the period till February 28.

Creditors realised Rs 68,766 crore of the total admitted claims in those 88 cases. The share of financial creditors and operational creditors stood at Rs 65,635 crore and Rs 3,131 crore, respectively, as per data. The IBBI, a key institution set up under the IBC, provided the figures in an affidavit submitted to the National Company Law Appellate Tribunal (NCLAT) last week.

On March 27, the tribunal directed the IBBI to file an affidavit, with details about average percentage of distribution of realised amount between financial creditors and operational creditors subsequent to insolvency resolution process. According to the affidavit, the realised amount was more than 100 per cent in some cases. In the 88 cases, financial creditors got 100 per cent realisation of admitted claims in 11 resolution plans, while operational creditors got only full realisation in only 6 cases.

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In three cases, financial creditors got more than 100 per cent realisation of admitted claims.   Among the 88 cases were big-ticket takeovers, including Tata Steel acquiring over Bhushan Steel and Vedanta's acquisition of Electrosteel. In the Bhushan Steel matter, total admitted claims of operational and financial creditors amounted to Rs 57,505.05 crore. Of this, financial creditors received 63.49 per cent of claims, while the operational creditors' realisation stood at 80.94 per cent.

With regard to Electrosteel, total admitted claims for both financial and operational creditors were Rs 13,958 crore. In this resolution process, in which Vedanta group got control of the company, financial creditors got 40.38 per cent of admitted claims, while the operational creditors' share was nil.

In the matter of Monnet Ispat & Energey, total admitted claims were Rs 11,478.08 crore, of which financial creditors got 26.26 per cent and operational creditors received 5.40 per cent.

The NCLAT had asked IBBI to give data in the resolution process of Essar Steel, where operational creditors and some financial creditors are opposing the resolution plan approved by the Committee of Creditors (CoC) and are seeking a higher share. As per the resolution plan approved by CoC, ArcelorMittal, the successful resolution applicant, would pay Essar Steel lenders Rs 41,987 crore for their total dues of Rs 49,395 crore. Operational creditors would get only Rs 214 crore against their outstanding of Rs 4,976 crore.