Insolvency Recoveries Plummet Due to Rising Delays in FY26: Report

Recoveries through the Insolvency and Bankruptcy Code significantly dropped in FY 2025-26 due to mounting delays. Recovery rates have nearly halved from the previous year while the number of admitted corporate insolvency cases also saw a slight decrease. The IBC, despite a recent amendment, continues to face challenges.

Recoveries of admitted claims under India's Insolvency and Bankruptcy Code (IBC) nearly halved in the financial year 2025-26, falling to 23% from 46% the previous year, amid escalating delays, as outlined in a report released on Thursday by rating agency Icra.

The report highlighted a 5% decrease in the number of cases entering the corporate insolvency resolution process, with 679 cases in FY26 compared to 724 in the year before. A concerning trend was identified with recovery rates dropping to 22% in the latter half of FY26 from 63% in the corresponding period of FY25.

The IBC marked its 10th anniversary in May 2026, yet long resolution times, substantial lender haircuts, and numerous liquidation cases remain persistent issues. Manushree Saggar of Icra noted that an overwhelming 78% of ongoing cases had exceeded the 270-day timeframe as of March 2026, exacerbating the problem.

Although adjustments were made through the seventh IBC amendment bill passed in April 2026, the implementation of these changes remains critical to improving outcomes. As the IBC struggles with resource shortages, timely case resolutions remain a challenge, leading to significant financial haircuts.