![]() ![]() Meanwhile, a PTI report in its analysis recently said public sector banks have raked in more profits in the three months ended June on the back of a persistent decline in bad loans and the trend may have a positive bearing on their balance sheets in the coming quarters. One reason for this could be the inordinate delays in the completion of CIRP proceedings owing to which lenders are accepting big haircuts.” “The NCLT Benches, too, have been raising questions in recent cases over lenders approving such big haircuts and are asking for an explanation behind the same. It also attributed Pritika Kumar, founder of Cornellia Chambers, saying that there has been an increase in bankers accepting huge haircuts in the recent years. Any plan which doesn’t comply with the benchmark should be considered ineligible.” The Business Line report quoted Siddharth Srivastava, partner (restructuring & insolvency) at Khaitan & Co, as saying, “Lenders ideally will always peg the returns from IBC resolution process to the outstanding amount (as opposed to fair value)… it is therefore advisable that this issue be addressed conclusively by amending the regulations to provide a benchmark for the quantum of haircuts in the resolution plan. The coronavirus pandemic also led to the slowdown in the IBC proceedings. ![]() ![]() The lower recovery has been attributed to the delay in the insolvency process, due to inadequate training and knowledge of the stakeholders, non-filling of vacancies at the tribunal, and high backlog of cases before the tribunal. Haircuts are losses that banks incur on the resolution of stressed assets. The creditors’ total realisation in resolution plans was about 179 per cent of the liquidation value, according to a Business Line report attributing the IBBI data. The total liquidation value stood at Rs 1.31 lakh crore. Creditors have realised Rs 2.35 lakh crore in about 517 IBC cases till June 30, 2022, out of the total claims of Rs 7.67 lakh crore, according to a media report. #IBC BANK NUMBER CODE#Banks have taken an average haircut of Rs 69 as losses for every Rs 100 of their claims admitted for the resolution of stressed assets under the Insolvency and Bankruptcy Code (IBC). ![]()
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