When a company cannot pay its debts, time becomes an asset that can be lost. Machinery stands idle, customers find other suppliers and a business that might have been sold as a going concern can lose the value that made it worth rescuing. The Insolvency and Bankruptcy Code was designed to bring that deteriorating situation into a structured process.
Enacted in May 2016, with corporate resolution provisions commencing that December, the Code created an important institutional change during the first Modi government. It combined a legal route for resolving corporate distress with defined roles for insolvency professionals, creditors and tribunals. [3]
Control could pass out of the boardroom
Under the corporate process, management vests in an interim resolution professional and the board’s powers are suspended. The professional is tasked with preserving the business as a going concern, while a committee of creditors provides a mechanism for decisions about its future. [1]
The change gave lenders a route beyond repeatedly asking an existing management to repay. A resolution could bring new ownership or restructuring; where that failed, liquidation remained possible. The framework also had to balance competing claims on a business whose assets might already be worth far less than its debts.
That is why a recovery percentage needs a denominator. A company’s admitted debt and the estimated proceeds from selling its remaining assets describe very different starting points.
Two measures of recovery
IBBI’s December 2025 statistics reported realisations through resolved cases equivalent to 31.63% of admitted claims and 171.54% of liquidation value. The figures can coexist: creditors recovered substantially more than the estimated liquidation value, while still giving up a large share of their claims. [2]
The same historical snapshot recorded 1,376 approved resolution plans and 2,952 liquidation orders. Approved-plan cases took an average of 619 days even after periods excluded by the adjudicating authority were removed. These figures describe different outcomes and should not be combined into a single count of companies successfully revived. [2]
The practical test is therefore demanding. A rescue must preserve value, allocate losses and reach a decision while there is still a viable business to transfer. An approval also has to be carried through: the existence of a plan is an important milestone, but its implementation determines what creditors and employees ultimately receive.
The Code supplied a new set of institutions and a credible prospect that control could change. Its durability depends on the less dramatic work inside that system—reliable company records, realistic valuations, capable professionals and tribunals able to decide cases before delay consumes the assets they are meant to preserve.