The Insolvency and Bankruptcy Code (IBC) is not a recovery tool, it’s supposed to turn unproductive companies into productive assets, said Ravi Mital, chairperson of Insolvency and Bankruptcy Board of India (IBBI) on Wednesday.
“There’s a considerable improvement in sales, liquidity, market cap, and employee expenses of companies that were resolved under the IBC. If these companies are showing 50% increase in employee expenses, I think the insolvency system has succeeded,” he said.
Mital also said that as against the popular belief that just about 30-32% of the claims admitted by the creditors have been realised under IBC, the actual recovery is 94%. “When a company goes into insolvency, we do its enterprise valuation.
Based on that fair valuation, we have recovered 94%. IBC cannot be held responsible for deterioration (in asset value) for a period when it was not even involved,” he said at the INSOL International Conclave 2026.
NCLT Performance and Impact
Ramalingam Sudhakar, president of National Company Law Tribunal (NCLT) said that since the introduction of IBC in 2016, the NCLT’s performance has improved due to strong domain knowledge, regular colloquiums for sharing best practices, effective case management, minimal interference, and strong support from stakeholders.
“IBC acts as a strong deterrent for corporate defaulters. The law works even without constant enforcement due to its strict consequences. Out of around 54,000 cases filed, around 47,000 have already been disposed of. Bank profits have also increased, and RBI considers IBC recoveries as a major factor in financial stability,” he said.
Further, Sudhakar said that NCLT has achieved recovery of about 52% as compared to while arounf 11.8% recoveries in debt recovery tribunal (DRT). “With improved infrastructure and continued stakeholder support, even better results could be achieved,” he said.
Deterrence and Behavioral Shifts
Meanwhile, Bhushan Kumar Sinha, whole time member of IBBI said that the IBC has been effective in improving behavioural outcomes, noting that around 30,000 insolvency applications were withdrawn as parties settled disputes, reflecting the deterrent effect of the law.
“The Code has evolved through several amendments, demonstrating its dynamic and adaptable nature. New resolution frameworks and exit windows have been introduced to make the system more efficient,” he said.
Some panelists expressed concerns over the rising potential risk in the unsecured retail lending. Bahram Vakil, co-founder at AZB & Partners said that unsecured retail lending is emerging as a potential risk area that could become problematic if left unaddressed.
“For banks, the only dangerous space is unsecured retail loans. We need to work on that. We know that there are infrastructural issues but we should be ready,” he said.
“We are seeing an uptick in consumer debt, and the need for a personal insolvency framework is hugely important at the moment,” said Antonia Menezes, senior financial sector specialist at World Bank.