IBC Recoveries Steady at 32% in Q2 as Creditors Absorb 67% Haircut: Report

The overall recovery rate under the Insolvency and Bankruptcy Code (IBC) remained rangebound during Q2 FY26, declining marginally to 32.44 per cent from 32.57 per cent in Q1FY26, indicating that creditors are facing a haircut of approximately 67 per cent on admitted claims, said a report by CareEdge on Friday. 

However, several of the cases currently being resolved are long-pending matters. Hence, accrued interest and overdue charges are admitted to these cases, inflating the aggregate claim amounts and impacting the overall recovery ratio.

As of September 2025, of the total 8,659 cases admitted into the corporate insolvency resolution process (CIRP), only around 15 per cent had ended in approval of resolution plans, while 21.9 per cent remained in the resolution process in comparison to 23.2 per cent as of the end of March 25.

Also read: Axis AMC eyes Rs 30,000-crore Alternates book, bets on private credit

Liquidation continued to be the most common mode of closure under the IBC framework with approximately 2,900 cases, or 33.4 per cent of all admitted cases concluded in liquidation. Notably, nearly 77 per cent of these cases pertained to entities that were either former BIFR (Board for Industrial and Financial Reconstruction)-referred cases or defunct companies.

According to the data shared by CareEdge in its report, around 15.5 per cent (1,342 CIRPs) were closed on appeal or review or were settled, while 14.1 per cent were withdrawn under Section 12A. The primary reason for withdrawal was the entire settlement with the applicant/creditors or another settlement with creditors.

In Q2FY26, the number of cases admitted under CIRP increased by 8.2 per cent YoY even as total admissions in FY25 remained below 1,000, indicating comparatively subdued levels over the past five years.

Meanwhile, the number of ongoing CIRPs had declined to 1,898 cases in Q2FY26 from 1,963 cases in Q2FY25, remaining broadly around the 1,900 level, with the manufacturing sector continuing to account for the largest share of cases -- 37 per cent. Real estate had the second highest share of 22 per cent, followed by 12 per cent by construction and 10 per cent by retail and wholesale trade.

In terms of case resolution timeline, delays in closing CIRP cases remained higher than those observed in liquidation across all stakeholder categories, according to the report. The cases initiated by corporate debtors continued to conclude relatively faster than those filed by financial or operational creditors. 

Also read: SBI to garner Rs 12,500 crore through bonds in FY26; Expects NIM stability even after probable RBI rate cut

Sequentially, the average time taken increased marginally across all categories, indicating a broad-based rise in resolution timelines.

As of September 2025, 77 per cent of the 1,898 ongoing CIRP cases were pending for more than 270 days, up from 67 per cent in June 2023 and 71 per cent in June 2024, indicating a steady shift towards longer resolution timelines. 

At the same time, the share of cases taking 180-270 days continued to be the smallest segment, highlighting that cases are either resolved relatively early or are increasingly moving into prolonged delays. Meanwhile, the proportion of cases in the ‘less than 90 days’ and ‘90 to 180 days’ categories mainly remained unchanged at around 8 per cent each, compared with the previous year.