An alarming data showed by CareEdge showed that the manufacturing sector is at the top in the insolvency cases while real estate ranks second in the list. According to CareEdge, a total of 38 percent of the 7058 companies belonging to the manufacturing sector reportedly admitted under the corporate insolvency resolution process. The second in the list is real estate companies that are admitted under the CIRPs. In the second quarter of the current fiscal year, 19 percent YoY witnessed a surge in the number of insolvency cases while the timeline for resolutions continued to increase. You should go through this article till the end for more details. Swipe down the page.
The report shared by CareEdge further shows that the share of the various sectors has remained constant compared with the corresponding period last year. But the manufacturing sector has the highest share in the number of companies admitted under CIRPs, at 38 percent of the overall cases, real estate sector is at number 2 with 21 percent while the construction sector accounts for 11 percent of the insolvency cases, and trade (wholesale & retail) sectors account for 10 percent. Shift to the next section and read more details.
Recently, the Supreme Court upheld the constitutionality of IBC provisions on Personal Guarantors’ Insolvency Resolution to dismiss more than 200 petitions that were challenging the legal validity of such provisions. SC’s direction implies that to settle outstanding debts owed to creditors the personal assets of guarantors can be utilized. CareEdge asserted, “The recovery rate from personal guarantors currently stands at 5.22%. This rate is anticipated to rise following the Supreme Court’s recent ruling affirming the constitutionality of the IBC provisions regarding Personal Guarantors’ Resolution”. Shift to the next section and read more details.
The Corporate Insolvency Resolution Process has increased about 19 percent YoY in the second quarter of the fiscal year 2024. The number of companies admitted to the insolvency process is still lower compared to pre-pandemic quarters in the fiscal year 2021. The rating agency CareEdge said, “The CIRP initiation scaled up rapidly till FY20 and dropped off in FY21 due to the pandemic. In FY22 and FY23, CIRP initiation commenced rising again. In FY23, the number of cases crossed the FY19 threshold, and the growth continued in Q2FY24,” Financial creditors (3,141 cases) and the operational creditors (3,491 cases) admitted under insolvency cases under. Stay tuned to this website for more details and further updates.