Archive · 5 Dec 2025
IBC Recovery Declines to 25% in Q2
The report by India Ratings and Research shows that the recovery rate under the Insolvency and Bankruptcy Code (IBC) has dropped to 25% in the second quarter of FY26.
This is a decrease from 30% in the first quarter.
The ratio of resolution to liquidation cases has also fallen to 0.7 times.
This means that fewer businesses are being turned around through IBC, and more cases are ending in liquidation.
The report highlights that the process is taking longer due to issues like capacity constraints, frequent litigation, and procedural challenges.
The timeline for corporate insolvency resolution processes has reached its highest since FY21.
The agency suggests that proposed amendments to the IBC, such as revised valuation templates and enhanced disclosure norms, could help improve the process and make it more efficient.
Recovery rate under IBC declined to 25% in Q2 of FY26 from 30% in Q1.
Resolution to liquidation ratio fell to 0.7 times from 0.9 times.
Liquidation remains the dominant mode of closure at 43% of total IBC cases.
CIRP timelines reached 729 days for financial creditors, 739 days for operational creditors, and 627 days for corporate debtors.
Proposed IBC amendments aim to improve process discipline and reduce recovery timelines.
- Who
- India Ratings and Research
- What
- Decline in recovery rate under IBC
- When
- Q2 of FY26 (September 2025)
- Where
- India
- Why
- Legacy issues, stretched insolvency timelines, and procedural challenges
- Recovery Rate
- 25%
- Resolution to Liquidation Ratio
- 0.7 times
- Liquidation Percentage
- 43%
- CIRP Timeline for FCs
- 729 days
- CIRP Timeline for OCs
- 739 days
- CIRP Timeline for CDs
- 627 days