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Ten years ago, India’s insolvency landscape was defined by stalled projects, endless litigation, weak recoveries and mounting bad loans. Companies remained trapped in legal limbo for years, banks struggled to recover dues, and distressed assets steadily lost value as cases moved through multiple forums.The Insolvency and Bankruptcy Code (IBC), enacted in 2016, was designed to change that. Conceived as a time-bound, creditor-driven framework for resolving financial distress, the law replaced a fragmented system with a single mechanism focused on business revival, value maximisation and faster resolution.A decade later, the IBC has emerged as one of India’s most consequential economic reforms. According to government data, 1,419 cases had yielded resolution plans by March 2026, facilitating realisation of more than Rs 4 lakh crore for creditors. The recoveries amounted to 95% of fair value and 167% of liquidation value.
Government data shows that more than 30,000 cases involving nearly Rs 14 lakh crore were resolved at the pre-admission stage through settlements and withdrawals, reflecting the deterrent effect of the law on borrowers.“The most significant change post IBC is shifting of control into the hands of banks,” Mukesh Chand, Senior Counsel at Economic Laws Practice, told TOI. “In the previous regime, be it RBI Schemes or BIFR, the banks were mostly at receiving end. However, with advent of IBC, through the powers conferred for initiation and control on the process through CoC, the banks now control the resolution process. Thus, now viable business could be resolved by the banks within the RBI framework and if things do not work out, then under IBC process, both these processes are largely within control of banks.“As the law completes its first decade, five transformations stand out.
From promoter control to creditor control
Perhaps the biggest structural shift brought about by the IBC was transferring power from defaulting promoters to financial creditors.Before the law came into force, lenders often found themselves locked in lengthy recovery battles while promoters continued to retain influence over distressed companies. Multiple legal forums and overlapping frameworks frequently resulted in delays and poor recovery outcomes.
The IBC fundamentally altered that equation by creating a creditor-driven process. Once a company enters the Corporate Insolvency Resolution Process (CIRP), decision-making authority shifts to the Committee of Creditors (CoC), which determines whether a business should be revived, sold or liquidated.The transformation was institutional as well as legal. “Over the past decade, the Insolvency and Bankruptcy Code (IBC) has fundamentally changed India’s approach to resolving corporate distress. It shifted the system from a debtor-in-possession model to a creditor-in-control framework, with a strong emphasis on time-bound resolution of stressed assets,” said Jatin Kapoor, Partner (Designate) at S&A Law Offices.The shift has helped create a more predictable framework for lenders and strengthened confidence in India’s credit markets.
From liquidation to business revival
A second major transformation has been the change in focus from merely recovering assets to preserving viable businesses.Prior to the IBC, insolvency often culminated in liquidation after years of delays. By the time proceedings ended, factories had shut down, employees had moved on and enterprise value had deteriorated significantly.The IBC sought to reverse that trend by treating insolvency as an opportunity for business rescue.Cases such as Essar Steel, Bhushan Steel, Electrosteel and DHFL demonstrated that distressed companies could be revived under new ownership rather than dismantled.According to Chand, the success of these cases reflects a common theme. “Success of the IBC resolution process is largely centred around the value in the business of the debtor. The successful resolutions such as Essar Steel, Bhushan Steel, Electrosteel, DHFL and others show that resolution works best where the business has underlying value and viability.” he says.
“Additionally, It also seen that manufacturing and real estate sector account for about 36% and 25% respectively share in CiRP initiation and since both sector have hard core asset base, the realisation under these sectors have been better than the service sector and sector with non-tangible assets base. While the realisation to the creditor as compared to their admitted claim has only been around 31.63% but this is a significant improvement as compared to recovery through other process.” he added.“While most of these cases went through routine lengthy litigation process but their underlying value ensured better recovery to the creditor.”Kapoor said the outcomes underscore the importance of competitive bidding and market-led value discovery.“These outcomes demonstrate that the IBC has been effective in preserving and unlocking value compared to liquidation or distressed asset sales, even though significant haircuts are often involved,” he said.Government-backed studies suggest the revival effect extends well beyond individual resolutions. An IIM Ahmedabad study found that resolved firms recorded significant improvements after resolution, with average sales increasing sharply, capital expenditure rising and market valuations improving substantially over a five-year period.The study noted that the aggregate market valuation of resolved listed entities increased from nearly Rs 2.8 lakh crore to around Rs 9 lakh crore over five years.
From fear of default to a culture of repayment
One of the most significant impacts of the IBC has occurred outside formal insolvency proceedings.The possibility of losing control of a company created a powerful incentive for borrowers to engage with lenders and settle disputes before insolvency proceedings advanced.The deterrent effect is visible in government data showing that more than 30,000 cases involving approximately Rs 14 lakh crore were settled before admission into the insolvency process.“The deterrent effect of the Code is evident from the fact that more than 30,000 cases filed before the National Company Law Tribunal were resolved at the pre-admission stage through withdrawals, involving amounts estimated at nearly Rs 14 lakh crore,” the government said while marking 10 years of the Code.
An IIM Bangalore study cited by the government found that borrower behaviour improved significantly after the IBC’s introduction. The proportion of loan accounts moving from the “Overdue” category to the “Normal” category increased steadily between 2018 and 2024, while the average period that accounts remained overdue fell sharply from 248-344 days to 30-87 days.The impact is also reflected in banking-sector data. The government noted that, without such settlements and withdrawals, gross NPAs would likely have remained substantially higher than the reported 2.1% level recorded in September 2025, compared with nearly 11.8% in 2017.
From lender-centric outcomes to broader stakeholder protection
Another transformation has been the expansion of the insolvency framework to accommodate a broader set of stakeholders.The early years of the IBC focused primarily on lenders and financial creditors. Over time, however, the framework evolved to recognise the interests of homebuyers, employees, suppliers and operational creditors.The Jaypee Infratech insolvency proceedings became a landmark example of this evolution. Thousands of homebuyers waiting for possession found themselves directly affected by the insolvency process, prompting wider recognition that corporate distress has consequences beyond banks and promoters.
The experience helped shape subsequent reforms and judicial interpretations that broadened stakeholder participation within the insolvency ecosystem.The Code’s stated objective increasingly evolved from debt recovery alone to balancing the interests of all stakeholders while preserving viable enterprises.The judiciary also played a critical role in strengthening the framework. Kapoor noted that landmark Supreme Court rulings such as Swiss Ribbons (2019) and Essar Steel (2019) reinforced “the principles of timely resolution, value maximization, and respect for the commercial wisdom of the CoC, providing much-needed certainty to stakeholders.”
From fragmented processes to a structured resolution ecosystem
Perhaps the IBC’s most enduring achievement has been the creation of an entirely new institutional ecosystem.The law established a structured framework involving the Insolvency and Bankruptcy Board of India (IBBI), insolvency professionals, information utilities, the National Company Law Tribunal (NCLT) and the National Company Law Appellate Tribunal (NCLAT).Together, these institutions created a specialised market for stressed assets and corporate restructuring.Investors now actively evaluate distressed businesses as acquisition opportunities. Resolution applicants range from industrial groups to global investors and private equity firms seeking value in stressed companies.The strengthening of the ecosystem has also been recognised internationally. The government noted that S&P Global Ratings upgraded India’s insolvency framework from Group C to Group B, citing improvements in resolution and recovery outcomes.According to government data, average recovery rates have increased from around 15-20% in the pre-IBC period to approximately 30% after the Code’s introduction, while resolution timelines have fallen from nearly six to eight years to about two years.The RBI’s Report on Trends and Progress of Banking in India 2024-25 also identified the IBC as the most effective recovery channel for stressed assets. Of the Rs 1.04 lakh crore recovered by scheduled commercial banks through various mechanisms, nearly Rs 54,528 crore, or 52.4%, came through the IBC process.
What next?
Despite these gains, experts say significant challenges remain.Chand believes the next phase of reforms should focus less on creating new insolvency mechanisms and more on improving value realisation.“I feel that instead of experimenting with different types of CIRP initiations, the next phase needs to focus on core areas to improve value realisation.”One concern is the performance of the framework in service-sector insolvencies.“IBC has not lived up to its expectations to resolve cases under service sector and failure of all the aviation CIRPs proves this,” ELP partner Chand said.He also highlighted concerns around liquidation outcomes.“As per IBBI figures, till March 2026, 3003 CIRPs have ended in liquidation with aggregate claim of Rs. 10.30 lakh crore as against the assets value Rs. 0.49 lakh crore. Low realisation at liquidation stage is another area of concern, which need attention.”
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Another issue is the large value tied up in avoidance applications.“Further, for bankers’ real value is still struck in receivable. As on March 2026, value of around Rs 4,38,169.07 crore is stuck in avoidance applications, these are supposedly banks funds struck in so called receivables which need urgent attention,” he said.Kapoor said the next phase should focus on improving efficiency and expanding the framework’s scope.“It is important to increase the capacity of the NCLT and NCLAT, reduce unnecessary adjournments, and leverage digital processes so that insolvency cases can be completed within the prescribed 330-day timeline,” he said.He also called for extending pre-packaged insolvency processes beyond MSMEs and operationalising group insolvency and cross-border insolvency mechanisms.According to Chand, future reforms should focus on sector-specific insolvency frameworks, faster judicial timelines and unlocking value trapped in litigation.“Thus, next phase of reforms should focus on sector specific CIRP, improving timeline at judicial level so that value stuck in liquidation cases and avoidance applications could be realised in a timely manner.”Ten years after its introduction, the IBC’s legacy extends far beyond recoveries and headline resolutions. By shifting control to creditors, encouraging business revival, improving repayment discipline, broadening stakeholder participation and building a dedicated insolvency ecosystem, the Code has fundamentally changed how India deals with corporate distress.As the framework enters its second decade, the focus is likely to shift from establishing the system to making it faster, more predictable and more effective in preserving value across an increasingly complex economy.
