Corporate Insolvency Resolution Process (CIRP) Under IBC: An Analysis Of Effectiveness And Challenge
- IJLLR Journal
- Jun 1
- 2 min read
Rajat Sharma, Faculty of Law College Dehradun, Uttaranchal University
Bhawna Arora, Associate Professor, Law College Dehradun, Uttaranchal University
Introduction
India's Insolvency and Bankruptcy Code 2016 has handled 8,002 cases through the Corporate Insolvency Resolution Process (CIRP) by September 2024. This marks a major step forward in the country's insolvency system. The closed cases show promising results - 75% have found resolution through different approaches. The success rate of resolutions compared to liquidations has jumped from 21% in 2017-18 to 61% in 2023-24.
The system still faces some roadblocks. Cases take 683 days on average to resolve, which goes well beyond the 180-day target. This points to vital implementation issues that need attention. The numbers tell an interesting story about recovery rates. Financial creditors get back 32% of their claims, and operational creditors recover about 25%. Liquidation cases paint an even grimmer picture. Only INR 8,943 crores came back from admitted claims of INR 228,702.84 crores - a tiny 3% recovery rate.
Our analysis will get into how CIRP works under the IBC framework and what challenges it faces. We want to look at the legal structure, important case laws, and implementation hurdles. We'll also see how India's system stacks up against global standards. This deep dive will help us learn about how IBC actually performs versus its goals and what changes could make it better.
Understanding CIRP under the Insolvency and Bankruptcy Code 2016
The Corporate Insolvency Resolution Process (CIRP) stands as the life-blood of India's insolvency framework under the Insolvency and Bankruptcy Code 2016. This process offers a well-laid-out approach to corporate insolvency. The main goal focuses on reviving businesses rather than liquidating them. Let's take a closer look at how this process works.
