1. The Insolvency and Bankruptcy Code (IBC), 2016 & The Insolvency and Bankruptcy Code (Amendment) Bill, 2017
Darshini Kansara
(Research Analyst)

2. This presentation is a summary based on the study given in the Economic Survey (January 29, 2018) and we, at CARE Ratings Limited, have only presented the same here.
The purpose of this presentation is only to understand the Insolvency and Bankruptcy Code, 2016 and the Insolvency and Bankruptcy Code (Amendment) Bill, 2017 and the current status of the proceedings against the 12 defaulting companies.

3. Overview
The Insolvency and Bankruptcy Code, 2016 (IBC) was passed in May 2016
There has been a significant amount of progress since then – the entire mechanism for the Corporate Insolvency Resolution Process (CIRP) has been put in place
A number of rules and regulations have been notified to create the institutions and professionals necessary for the process to work
A large number of cases have entered the insolvency process, and a few have even exited the process
Over 1,300 Insolvency Professionals are registered (under three Insolvency Professional Agencies)
Over 525 cases of corporate insolvency have been admitted across all the National Company Law Tribunal (NCLT) benches*
Note: * - The details are from the orders uploaded on the NCLT website on or before 6 January, 2018 for petitions dated till 31 December This data is tentative, and might change as new orders are updated

4. Status of cases admitted for Corporate Insolvency Resolution Process (CIRP)
Sr No
Status of CIRP
Number of Corporates 1
CIRP in progress
442
of which*
< 30 days 33
days
225
days 67
>180 days
117 2
Resolution plans approved 10 3
Liquidation order passed 30 4
Closed by appeal/review 36
Total CIRP petitions admitted:
525
Source: IBBI
Note: *: For a few corporates, orders are still awaited, hence the totals might not be exact

5. Sector-wise Analysis of Admitted Cases under IBC, 2016 (Top-5 sectors)
Sr No
Sector
Total Underlying Default (Rs Crore)
Number of Corporates
CIRP In Progress
Resolution Plan Approved
Liquidation Order Passed
Closed By Appeal/ Review
Total 1
Steel
57,001 39 2 3 45
Retail
12,719 12 -   -
Capital Goods - Non-Electrical Equipment
4,785 14 - 17 4
Textiles
4,679 29 33 5
Trading
4,560 30
Total (Top 5 sectors)
83,744
124
146 6
Others
45,065
327 18
379
128,810
451 10 34
525
Source: IBBI
Note: The details are from the orders uploaded on the NCLT website on or before January 6, 2018 for petitions dated till December 31, This data is tentative and might change as new orders are uploaded.
Top 5 sectors account for 65% share in the total underlying default amount

6. Companies That Underwent Resolution Under IBC
Name of Corporate Debtor
Insolvency Commencement Date
Total Claims Of FCs*
Liquidation Value*
Resolution Amount - FCs*
% Recovery For FCs
% Realisation To Liquidation Value
Synergies Doorey Automotive Ltd.
23-Jan-17
972.2
8.2
54.7 6%
669%
Shree Metalik Ltd
30-Jan-17
1,287.20
283
607.3
47%
215%
Kamineni Steel & Power India Pvt. Ltd.#
10-Feb-17
1,508.90
761
600
40%
79%
Chhaparia Industries Pvt. Ltd.
24-Feb-17
49.8
17.2
20.6
41%
120%
Jekpl Private Ltd.
17-Mar-17
599
222.1
162
27%
73%
Hotel Gaudavan Pvt. Ltd.
31-Mar-17
76.7
36.1
44.2
58%
122%
Prowess International Pvt. Ltd.
20-Apr-17
3.4
N.A
100%
N.A.

7. Companies That Underwent Resolution Under IBC
Contd.
Name of Corporate Debtor
Insolvency Commencement Date
Total Claims Of FCs*
Liquidation Value*
Resolution Amount - FCs*
% Recovery For FCs
% Realisation To Liquidation Value
West Bengal Essential Commodities Supply Corp. Ltd.
29-May-17
359.2
N.A.
185.8
52%
Shirdi Industries Ltd
18-May-17
673.9
103.1
175
26%
170%
Nandan Hotels Ltd.
17-Aug-17
1.4
Source: IBBI
Notes: *: Amounts are in Crores.
FC : Financial Creditors, OC : Operational Creditors, CD : Corporate Debtors
#: This resolution order was stayed by NCLAT

8. A major factor behind the effectiveness of the new Code has been the adjudication by the Judiciary
The court prescribed strict time limits for various procedures under it
In spite of the large inflow of cases to NCLT benches across India, these benches have been able to admit or reject applications for CIRP admissions with few delays
In addition, appellate courts, including the NCLAT, High Courts and the Supreme Court have also disposed appeals quickly and decisively. In this process, a rich case-law has evolved, reducing future legal uncertainty
On June 13, 2017, the Reserve Bank of India (RBI) identified 12 large loan defaulters where the Insolvency and Bankruptcy Code (IBC) was initiated. The status of the proceedings against these 12 defaulters, as of November 2017, is shown in the table in the following slides:

9. First 12 defaulters as notified by RBI
Sr No
Company#
Sector
Claims Admitted (Rs Crores)
180 Day Period Ends On
Current Status of CIRP 1
Alok Industries Ltd.
Textiles
29,912
Applied for extension of 90 days 2
Amtek Auto Ltd.
Auto component
12,586 3
ABG Shipyard Ltd.
Ship building
18,539
CoC approved extension of 90 days 4
Bhushan Steel Ltd.
Steel
55,989
In process 5
Bhushan Power and Steel Ltd.
Steel & Power Generation
48,524
Extension up to 22 April, 2018 6
Electrosteel Steels Ltd
13,302
Extension up to 17 April, 2018
Source: IBBI
Note: # Era Infra Engineering Ltd. has not yet been admitted to CIRP, CoC – Committee of Creditors

10. First 12 defaulters as notified by RBI
Contd.
Sr No
Company#
Sector
Claims Admitted (Rs Crores)
180 Day Period Ends On
Current Status of CIRP 7
Essar Steel Ltd
Steel
50,778
Applied for extension of 90 days 8
Jyoti Structures Ltd.
Power Transmission
8,078
Extension up to 31st Mar, 2018 9
Jaypee Infratech Ltd.
Infrastructure Development
13,322 10
Lanco Infratech Ltd.
Power Generation
51,505 11
Monnet Ispat and Energy Ltd.
10,412
Total
312,947

11. Insolvency and Bankruptcy Code (Amendment) Bill, 2017
The Insolvency and Bankruptcy Code (Amendment) Bill, 2017, was passed by the Lok Sabha on December 2017, and by the Rajya Sabha on January 2, 2018
It replaces the IBC (Amendment) Bill, 2017, which was promulgated on November 23, 2017
In the CIRP the Committee of Creditors (CoC) invites resolution plans from resolution applicants, and may select one of these plans
The Code originally does not specify any restrictions on who these resolution applicants might be
However, the Bill has declared that some persons are ineligible to submit resolution plans:
an undischarged insolvent;
a “wilful defaulter”;
a borrower whose account has been identified as a non-performing asset for over a year and who has not repaid the amount before submitting a plan;
a person convicted of an offence punishable with two or more years of imprisonment;

12. Insolvency and Bankruptcy Code (Amendment) Bill, 2017
a person disqualified as a director under the Companies Act, 2013;
a person prohibited from trading in securities;
a person who is the promoter or in the management of a company which has indulged in undervalued, preferential, or fraudulent transactions;
a person who has given guarantee on a liability of the defaulting company undergoing resolution or liquidation, and has not honored the guarantee;
a person who is subject to any of the above disabilities in any jurisdiction outside India; or
a person who has a connected person disqualified in any manner above
The thrust of the Bill is to prevent a range of undesirable persons from bidding for the debtor. The Bill may prevent promoters from bidding for their own firms
The Bill, thus, seeks to achieve a balanced approach, enabling the CoC to avoid imprudent transactions, while preserving its freedom to choose the best resolution plan from amongst all the applicants.

13. Thank You