IBC recoveries improve in Q1FY27, but ageing cases and liquidation remain key challenges

Recoveries under the Insolvency and Bankruptcy Code (IBC) improved sequentially in the first quarter of FY27, with financial creditors recovering 28.6% of admitted claims, compared with 22.8% in Q4FY26. However, the recovery rate remained marginally below the cumulative 30.5% recorded across all resolved cases up to June 2026, indicating that creditor losses on resolved accounts continue to be significant, according to a report by CareEdge Ratings. 

Recoveries rise above liquidation value 

During Q1FY27, financial creditors realised ₹3,557 crore against admitted claims of ₹12,443 crore. Recoveries stood at 136.7% of liquidation value, underscoring the value-accretive nature of resolution-led outcomes compared with liquidation. On a cumulative basis, creditors have realised ₹4.35 lakh crore, equivalent to 30.5% of admitted claims and 166.6% of liquidation value. 

The actual recovery rate is likely to be higher, as older insolvency cases often include accrued interest and other receivables in admitted claims, over and above principal outstanding and overdue amounts. While the improvement in quarterly recoveries points to better outcomes in cases resolved during the period, overall performance remains constrained by long-pending and deeply stressed accounts, which generally have lower realisation potential. 

Despite these challenges, the significant premium over liquidation value highlights the IBC’s effectiveness in preserving enterprise value and improving creditor recoveries, even where resolution plans involve substantial haircuts. 

Liquidation remains the dominant closure route 

The overall CIRP pipeline remained broadly stable during Q1FY27, suggesting that case closures continued to keep pace with fresh admissions. Of the 9,166 cases admitted under CIRP as of June 30, 2026, successful resolutions accounted for 16.2%, or 1,484 cases, up from 15.8%, or 1,419 cases, at the end of FY26. Meanwhile, ongoing cases declined to 1,865 from 1,885, reducing their share to 20.3% from 21%. 

Liquidation continued to be the dominant closure route, accounting for 3,074 cases, or 33.5% of total admitted CIRPs, broadly unchanged from 33.4% in FY26. The continued prevalence of liquidation suggests that many companies enter insolvency only after substantial deterioration in their financial and operational position, limiting the scope for revival through resolution plans. 

Cases closed through appeal, review or settlement remained stable at 15.4% while withdrawals under Section 12A edged up to 14.5%, or 1,333 cases, from 14.4% in FY26. The trend indicates continued use of negotiated settlements outside the formal resolution process. 

Financial creditors drive fresh admissions as ageing cases persist 

Fresh CIRP admissions remained subdued, with 177 cases admitted in Q1FY27, down 5.3% year-on-year from 187 cases in Q1FY26. Financial creditors accounted for 116 admissions, or 65.5% of the total, compared with 54.5% a year earlier, reinforcing the increasingly financial creditor-driven nature of the insolvency framework. 

Manufacturing, real estate and construction continued to dominate sectoral admissions, together accounting for nearly 70% of cumulative CIRPs. Their concentration reflects continued exposure to leverage, cash-flow volatility, project execution risks and cyclical demand. 

However, ageing cases remain a major concern. Around 76% of the 1,865 ongoing CIRPs had been pending for more than 270 days as of June 2026, only marginally lower than 78% a year earlier and well above 68% in June 2024. The average resolution timeline also increased to 757 days in June 2026 from 744 days in March 2026 and 713 days in March 2025. 

The rising resolution duration across cases initiated by financial creditors, operational creditors and corporate debtors indicates that delays are systemic. Prolonged litigation, valuation disputes, difficulties in attracting resolution applicants and the complexity of large stressed assets continue to impede timely resolution. 

Thus, while the stable CIRP pipeline and improvement in quarterly recoveries are positive, the continued dominance of liquidation and the growing age of unresolved cases highlight the need for faster and more effective resolution to maximise value preservation and creditor recoveries under the IBC.