Lok Sabha Question No. 48 (UNSTARRED), answered on 2023-12-04
Subject: Insolvency and Bankruptcy Code, 2016
Ministry: CORPORATE AFFAIRS
Asked by: Umesh G. Jadhav, Prathap Simha, L.S. Tejasvi Surya, Annasaheb Shankar Jolle

## GOVERNMENT OF INDIA

## MINISTRY OF CORPORATE AFFAIRS

## LOK SABHA

## ANSWERED ON MONDAY THE 4 TH  DECEMBER, 2023

## UNSTARRED QUESTION NO. 48 AGRAHAYANA 13, 1945 (SAKA)

## INSOLVENCY AND BANKRUPTCY CODE, 2016

## QUESTION

## 48. DR. UMESH G. JADHAV:

SHRI PRATHAP SIMHA:

SHRI L.S. TEJASVI SURYA:

SHRI ANNASAHEB SHANKAR JOLLE:

Will the Minister of CORPORATE AFFAIRS be pleased to state:

- (a) whether  the  Insolvency  and  Bankruptcy  Code,  2016  has  enabled  faster  and smoother closure of companies in the country, If so, the benefits of bringing the Code;
- (b) the  number  of  companies  which  have  closed  or  been  liquidated  following  the procedure under the Code since its inception, year-wise;
- (c) the average time taken to liquidate or close companies currently and the average time taken for the closure of companies before the inception of the Code;
- (d) the  total  valuation  or  amount  of  the  companies  which  have  been  closed  or liquidated  so  far,  year-wise,  number  and  value  of  companies  which  are  under liquidation or closure; and
- (e) the manner in which the IBC helped in furthering Ease of Doing Business in the country?

## ANSWER

MINISTER OF STATE (INDEPENDENT CHARGE) OF THE MINISTRY OF STATISTICS AND PROGRAMME IMPLEMENTATION; MINISTER OF STATE (INDEPENDENT CHARGE) OF THE  MINISTRY  OF  PLANNING;  AND  MINISTER  OF  STATE  IN  THE  MINISTRY  OF

CORPORATE AFFAIRS

[RAO INDERJIT SINGH]

- (a) The IBC was enacted to consolidate and amend laws for the insolvency resolution of  corporate persons, partnership firms, and individuals, has brought significant improvements to India's insolvency framework. Designed to resolve insolvencies within a defined timeframe, it aims to maximize value of assets of such insolvent entities,  boost  entrepreneurship,  and  ensure  credit  availability.  By  balancing stakeholders' interests and modifying government dues' priority, the IBC facilitates a more equitable resolution process.
- (b) As  per  data  provided  by  Insolvency  and  Bankruptcy  Board  of  India  (IBBI),  the Regulator under the Code, as on 30 th  September 2023, the year-wise closure/dissolution of corporate persons under liquidation and voluntary liquidation under the Code is as follow:

| Period      |   Number of closure/dissolution of corporate persons under liquidation |   Number of dissolutions under voluntary liquidation |
|-------------|------------------------------------------------------------------------|------------------------------------------------------|
| 2017 - 18   |                                                                      1 |                                                    2 |
| 2018 - 19   |                                                                      7 |                                                   40 |
| 2019 - 20   |                                                                     63 |                                                  110 |
| 2020 - 21   |                                                                     75 |                                                   96 |
| 2021 - 22   |                                                                     90 |                                                  107 |
| 2022 - 23   |                                                                     81 |                                                  174 |
| Apr-Sept 23 |                                                                     66 |                                                  115 |
| Total       |                                                                    383 |                                                  644 |

- (c) 383 liquidation processes took, on an average, 465 days for submission of final report and 631 days for closure. 644 voluntary liquidation processes took, on an average, 389 days for submission of final report and 676 days for dissolution.

As regards, the average time taken for closure of companies before the inception of the Code, the process of winding up was being governed under the Companies Act, 1956 and Companies (Court) Rules, 1959. The entire liquidation process, apart from complexity of the case and size of the company depended on several factors including appointing a liquidator, sale of company assets and agreeing on creditors' claims  etc.  as  per  orders/directions  of  the  concerned  High  Court.  Hence,  the average time taken for dissolving the companies differs from state to state.

- (d) Liquidation value of corporate persons which have witnessed process closure or dissolved under liquidation as on 30 th  September 2023 are as follow:

| Period      | Valuation (In Rs. Crore)   |
|-------------|----------------------------|
| 2017 - 18   | 1                          |
| 2018 - 19   | 1                          |
| 2019 - 20   | 210                        |
| 2020 - 21   | 1,108                      |
| 2021 - 22   | 760                        |
| 2022 - 23   | 741                        |
| Apr-Sept 23 | 144                        |
| Total       | 2,965                      |

As on 30 th  September 2023, 1866 cases are undergoing the liquidation process and the liquidation value, for 1804 cases in which data is available, is Rs.56,563 crore. Further, 1005 cases are undergoing the voluntary liquidation process. Valuation information for corporate persons undergoing voluntary liquidation process and dissolved are not maintained by IBBI.

- (e) The  IBC  has  significantly  advanced  the  Ease  of  Doing  Business  in  India  by introducing  a  more  efficient  insolvency  resolution  process.  Designed  to  resolve insolvencies within a defined timeframe, it aims to maximize value of assets of such insolvent entities, boost entrepreneurship, and ensure credit availability.

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