NCLT's Record Resolutions: Driving Turnaround of Stressed Assets in FY24

The National Company Law Tribunal (NCLT) approved 269 resolution plans in FY24, marking a 42% increase from the previous year. The uptick was driven by new NCLT members and greater investor interest. However, recovery rates dropped, and timelines stretched to 850 days. Real estate and manufacturing sectors saw significant growth in resolutions.

The National Company Law Tribunal (NCLT) achieved a milestone by approving a record 269 resolution plans under the insolvency law in fiscal year 2023-24, a 42 per cent rise from the previous year, a recent Crisil Ratings report revealed.

Among these cases, 88 per cent were from earlier years' admissions, driven by increased investor interest in turning around stressed assets and the appointment of new NCLT members. Despite this momentum, the financial year 2023-24 saw a moderation in recovery rates and stretched timelines, with recovery rates dropping to 27 per cent from last year's 36 per cent.

The real estate and manufacturing sectors contributed 65 per cent of the total approved plans. Crisil Ratings noted the extended resolution timeline of 850 days, up from 825 days the previous year. Demand durability across sectors led to more acceptable resolution plans, with real estate and manufacturing resolutions increasing by 200 per cent and 22 per cent, respectively.

(With inputs from agencies.)