The Economic Impact of the Insolvency and Bankruptcy Code (IBC) 2016 on Corporate Reconstruction in India.

The Insolvency and Bankruptcy Code (IBC) of 2016 has been a game changer for India’s insolvency regime, significantly improving the resolution of non-performing assets (NPAs) and enhancing recovery rates (Abhirami & Rahul, 2022). Despite the progress, several challenges such as delays in proceedings, lack of cross-border insolvency regulations, and a shortage of tribunals persist (Karanth & Prabu, 2024). This study aims to empirically analyze the economic effects of IBC and the performance of the judiciary in the reconstruction of sick companies. The research uses a new dataset comprising orders passed by the National Company Law Tribunal (NCLT) and National Company Law Appellate Tribunal (NCLAT) under the IBC. By examining cases from October 2016 to April 2024, this paper explores key trends in the corporate insolvency resolution process (CIRP), including the number of cases admitted, settled, closed, or withdrawn under Section 12A, as well as companies liquidated or revived through a resolution plan. The findings show that of the 7,813 companies admitted to CIRP, 1,005 were resolved, while 32.59% of closed CIRPs resulted in liquidation compared to 12.86% ending with a resolution plan. These findings highlight the economic impact of IBC and underscore the need for further reforms to enhance the resolution process.