The recoveries under the Insolvency and Bankruptcy Code (IBC) against admitted claims nearly halved in FY2025-26 to 23% from 46% in the preceding financial year due to rising delays, a report said on Thursday.At the same time, the number of cases admitted in the corporate insolvency resolution process (CIRP) declined by 5% to 679 from 724, according to a report by rating agency Icra.
This was led by a significant drop in recoveries to 22% in H2 FY2025-26 from 63% in H2 FY2024-25, which is a cause for concern, the rating agency outlined.
Since the introduction of the IBC in 2016, a total of 8,987 corporate debtors have been admitted, with 64% of the CIRPs being resolved, either through a successful RP (resolution plan), withdrawal or liquidation, by March 2026.“The IBC, which completed 10 years in May 2026, continues to be plagued by long resolution timeframes, high haircuts for lenders and a sizeable share of liquidation cases. After the strong recovery witnessed in FY25, realisations dipped sharply with the third quarter of FY26 seeing the worst haircut of 80%,” Icra Senior Vice President and Group Head, Structured Finance Ratings, Manushree Saggar, said.Further, she stated that almost 78% of the ongoing CIRP cases had exceeded 270 days, post admission by the NCLT, as on March 31, 2026.
“Although the seventh IBC amendment bill was passed in April 2026 to address shortcomings, Icra believes that the actual implementation of the revised code would be critical to improve the success rate. Also, while various measures have been undertaken to place a greater onus on the NCLT to resolve cases in a time-bound manner, it continues to be affected by manpower shortfall, leading to elongated timelines and consequently significant haircuts,” Saggar added.Empirical data suggests that recoveries in case of successful RPs (31% recovery) have been higher than for cases resolved through liquidation (4% recovery), the report mentioned.An encouraging sign was lower liquidations in H2 FY2025-26, resulting in a resolution-to-liquidation ratio of 1.11 against 0.77 in H1 FY2025-26.The decline in recovery rates in FY2025-26 was due to a few large cases (admitted claims of more than ₹1,000 crore), wherein 24% recovery was achieved against the admitted claims.These cases accounted for 95% of the recovery amount but a minuscule 8% of the number of approved RPs in FY2025-26.According to Icra, an improvement in recoveries for large cases would be critical to the overall success of the Code.The average resolution time worsened to 744 days as of March 31, 2026, from 713 days as of March 31, 2025, significantly exceeding the deadline provided by the IBC.Real estate and construction continued to account for the highest number of cases admitted in FY2025-26, as per the report.
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