‘Second wave may delay resolutions, increase haircuts’

FY22 realisation under IBC rests on 8-9 large accounts: ICRA

The second wave of the COVID-19 pandemic may again delay resolutions under the Insolvency & Bankruptcy Code (IBC) and increase haircuts for lenders, though realisations for financial creditors through IBC is likely to improve under the Code in FY22, ICRA said in a report. Stating that realisation for financial creditors from the resolution under the IBC declined significantly fell to ₹26,000 crore in FY21 — almost a quarter of the realisations in FY20 — it said financial creditors may realise about ₹55,000-60,000 crore in FY22, largely driven by the expected resolution of a large housing finance firm. This is likely to , it added without naming be DHFL. “The outbreak of the COVID-19 pandemic and its related effects in FY21 battered the prospects for stressed asset resolution. The pandemic has increased operational challenges for the various parties involved in a corporate insolvency resolution process (CIRP), which resulted in limited cases yielding a resolution plan,” ICRA said. “Further, the suspension of new proceedings under the IBC for the entire fiscal resulted in a sharp slowdown in the resolution process,” it added.