New Delhi, Dec 29 The proposed amendments to the Insolvency and Bankruptcy Code (IBC) such as introduction of group insolvency, cross-border insolvency and creditor-initiated insolvency are encouraging as they could boost recovery rates which been persistently low due to the lengthy resolution process, according to a report released on Monday.
The strengthening of NCLT and NCLAT manpower along with other legal reforms are expected to reduce the burden on the judiciary, according to the ICRA report.
It expects the proposed amendments introduced to IBC code, in Parliament along with other reforms and proposals put forth by Ministry of Corporate Affairs (MCA) and Insolvency and Bankruptcy Board of India (IBBI), to reduce recovery timelines and improve recovery rates for lenders, albeit only for non-real estate sector cases.
The report also highlights that real estate sector-specific reforms have not been addressed in the current proposals despite the fact that the real estate and construction (RE) sector has the second highest share in cases ongoing in corporate insolvency resolution process (CIRP) as on September 30, 2025.
ICRA believes that structural reforms would be needed for the RE sector as protecting homebuyers and resolution of stuck housing projects has been a focus area for the Government.
The IBC which completed nine years in October 2025, has delivered better realisations for creditors over other recovery modes with total recovery of around Rs. 4 lakh crore despite its shortcomings. Till September 2025, an overall 8,658 corporate debtors (CD) have been admitted, of which 63 per cent of the CIRP has been resolved either through a successful resolution plan or withdrawal or liquidation, the report states.
However, lenders had to take steep haircuts with limited recovery of 32 per cent recorded through successful resolution plans. In the backdrop of higher haircuts for lenders and extended recovery timeframes, an extensive overhaul of the IBC has been in the works with the seventh amendment to The Insolvency and Bankruptcy Code (Amendment) Bill, 2025, introduced in the Lok Sabha in August 2025. While it was initially expected that the bill would pass in the winter session, it is now expected to be taken up in the upcoming Budget session.
Manushree Saggar, Senior Vice President and Group Head, Structured Finance Ratings, ICRA, said: “While the recovery rates improved till Q4 FY2025, the trend somewhat reversed in H1 FY2026 with dip in recovery. Further, based on data till September 30, 2025, almost three-fourth of the ongoing CIRP cases exceeded 270 days, post admission by the National Company Law Tribunal (NCLT). The recommendations of SCLB, if passed, are expected to improve recovery rates and reduce timelines for the CIRP process under IBC.”
While all the amendments are positive, ICRA notes that there are delays at NCLT, which have not been specifically addressed. As of March 2025, there are over 30,000 IBC cases pending before NCLT and basis the existing capacity of the NCLT, it is expected to take more than a decade to conclude these cases. While the number of fresh cases being admitted to NCLT has been coming down, ICRA notes that there has not been much traction in approval of resolution plans (RP) with only 105 RPs approved in H1 FY2026 against 124 in H1 FY2025.
The report notes that while MCA is planning to increase the number of NCLT and NCLAT benches for getting meaningful traction, the same would be key to reduce the timelines for the CIRP process, which stands at over 700 days, over twice the mandated 330-days timeline.
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