Insolvency Bankruptcies Code was introduced in India in October 2016. IBC is a
code to help the company make a comeback in the market after filing for
bankruptcy. The Code of IBC was focused on Speedy Recovery of the Debts form the
Debtor itself. The SBI being the most suffrage of loss due to holding a larger
amount of market value and being one of the wealthiest bank in India, followed
by other banks like HDFC, AXIS, ICICI, PNB, IDBI, BOB, UBI, these banks has
undergone several bank mergers too and the amount of bad debt has nearly 4lakh
The banks play a vital role in the country economics as not only corporates need money for IPOs, market stocks and etc. purpose but government
and other consumer also go bank for the needed money. As bank hold an atmost
importance some big banks like Silicon Valley bank, Credit Suisse are some bank
where the assets fallen down eventually being unable to handle the liability of
the banks itself.
Data Of Company Under IBC [Liquidatioin & CRIP]
mentioned earlier the data was the visual representation of the company that has
been under the process of IBC. The process under IBC initiated with CRIP process
first and then turn into liquidation, might court as the case maybe initiate
liquidation itself. The data portrait the number of the company from 2017 to
2023 has been formulated over this year. The further data in Orange portrait the
number of companies that has been liquidated by the time with years and the data
taken by the IBC Official Website the Grey data output the CRIP process where
the cases are still being pursue by the court with years and the data taken by
the IBC Official Website The data of chart is a visual representation in real
time where the company got formulated, liquidated or Processed under the IBC.
What Is IBC In India?
The IBC stands for Insolvency Bankruptcies Code; the code was introduced on
October 2016 in India. Before landing such code the market was ruled by the
Securitisation and Reconstruction of Financial Assets and Enforcement of
Security Interest Act (SARFAESI), Debt Recovery Tribunals and Lok Adalat. The
code was implemented for the benefit of Debtor and Creditor with a valuable
solution of the assets at the time of the Insolvency.
The Code of IBC was focused on Speedy Recovery of the Debts form the Debtor
itself. It valued the Creditor and Bank or Investor's money more and made the
processes further flexible and accurate for the loan recovery. The idea of
formulating one of the smartest code by the legislation was to tackle the bad
loan or the insolvent individuals or company to get corrupted by losses.
The IBC formulation was a fixed stated task for the old compile loans and debts
that laws like SARFAESI act, Lok Adalat, Debt Recovery Tribunals were performing
a relentless depraved performance so need of reformation was held up by Indian
Government. The Impactful insights of IBC was performing an outrages number of
recovery in few months and made a huge impact.
The IBC used 2 vital stage for corporates insolvency, the Resolution &
Liquidation for those who got trigged under IBC for insolvency. The resolution
state the re-solution for the company either by restructuring of the company,
Debt, or New Ownership plan for the company. The stage of resolution under the
IBC has an important gateway for the company to make a comeback in the market.
Further if the resolution failed to take place the Company moves to Liquidation
where the assets of the company is sold off either by equal division or making
an auctions by the AA [Adjudication Authority] or selected Officer of it. The
Liquidation under such circumstances make the company goes all in and get over
all the assets and shut down or written off completely, the creditor gets their
money back either with a cut in interest or none and might also suffers a huge
loss on the investment value thereof.
Why IBC Is Used?
The IBC saves company, company stocks, bonds to turn into penny. As a matter of
fact, the company gets a chance to make a comeback in the market once again. But
evidentially once the company has filed for the bankruptcy the company cost a
penny to the investor and their shareholders, so how a comeback be possible?
Interestingly the owner of the company falls under certain precisely chapters or
the grey area for where the recovery is still possible.
According to Investopedia, "the market of US has been a prime example where the
company files for the Insolvency and Bankruptcies and still make a comeback in
the market on the hands of Restructuring the company or Merger and etc." The
Value of IBC is far greater than saving a company from 'a thousand-dollar to
being a penny'. The Law holds chapter 11 under the US law for bankruptcies, the
company falls under chapter 11 where the it will file for restructuring of the
company. That leaves new share value, new face, new bonds and even new
The restructuring of the company under chapter 11 still makes a loss for the
investor and the shareholders of the companies. The loss is fixed for them but
company which has ruled the marked for decades will definitely has a long
promises comeback. The bonds holder will be the less one to be affected has
they'll be rewarded with other bonds or shares on face value.
Similarly, in India the company gets an option between moving with Liquidation
or Resolution of the company. The liquidation of the assets will amount to a
huge loss for the investor and the shareholder of the companies, as liquidation
will dissolve all the assets of the company revalued the particulars of the
companies and the AA or the officer appointed for it will start the selling or
bidding process of the companies' assets. This process take time near about 1 to
2 years and by then, the equipment's or any other tools/ products get worthless
has the case will be. In the Go First aircrafts, the liquidation will hamper the
assets on first place and money recovery will be a loss making decision.
The resolution of the company makes a way for the investors and the creditor to
get their money back or the loss cover to their bare minimum and helps to be in
a better position. The company files for the resolution for them that results in
time for atleast 1 years or more, where they get rewarded for many exemptions
like No Legal Actions, No Frizzing of assets, and other vital but a formulating
events take place where the companies can start growing back or have bounce back
strategies for the market. The results, investors get excellent opportunity to
get their profits or a bare minimum loss for first few financial years or
The companies like Apple, Marvel Entertainment, General Motors, Ally Finance,
Chyrsler, yes bank, Six Flags and etc. have made a comeback from the
bankruptcy. The model of resolution or name it has restructuring or as a chapter
11 the amount of leverage this plans provide to the companies that it gets a
vide ranges of market input to make a growth in the small period of time. The
IBC helps the corporate debtor[CD] to get back into business as no government
will expects making millions and billions on bad debts that can't be recovered
as chapter 7 and Liquidation provide the least amounts of chances to recovery
the IBC refers to great affects in resolutions for the CDs in very possible
What Is The Process Of IBC?
The IBC runs on the potential credibility of the Corporate Debtor [CD] or a
company itself. When the company or CD has taken a loan for its business and
fails to repay it to the creditor [ the bank or any financial institution or
individual] either the creditor or the debtor itself apply for the initiation of
a Corporate Insolvency Resolution Process (CIRP) under Section 6 of the IBC.
The process of CIRP is vital for the company, under the CRIP the value was added
previously was 1lakh by the government which extended up to 1corer. That sum of
the companies to apply for insolvency is they need to exceeds the amount of
defaults stated under the act. The process of CRIP or Resolution starts when the
application of the companies or the CD is reached and accepted by the
Adjudicating Authority[AA] these are setup under IBC and the National Company
Law Tribunal[NCLT] are the AA under state.
The Tribunal gets 14 days to accept or reject the application of the debtor, the
case under Go First was a notice of motion was filed by the Go First for the
speeding process of the application acceptance as they stated the reason, "The
creditor is being rent less and asking for their Airplanes back". The reason
being sufficient enough for the tribunal to accept it or may speed up the
process. After 14 days and acceptance of the application the process of CRIP or
resolution will take place and the Limitation is 330 days.
The tribunal accept the application the AA appoints Interim Resolution
Professional [IPR] from Insolvency Professional Agency[IPA]. The IPR holds all
the company assets commercial transaction, all the debt information, and etc.
under them as the IPR are professional CA, CS or lawyers, they get into all the
aspect that will be provided to CoC. The CoC stands for Committee of Creditor.
The CoC are the unrelated financial Creditor of defaulting company they play an
important role regarding decision making body in CRIP, the work of CoC is to
decided that if the company is viable enough to make a comeback or restructured
or give a fresh start to the company or Liquidated the company and get the money
back for all the creditor. The process of CRIP the CoC appoints an Insolvency
Professional [IP] to look after company operation while the company is under the
A separate viable agreement is made by the company itself, the present merger,
demerger, restructured of Debt and etc. take place by the company. The IP go
through the proposal by the company and it submitted to CoC and be examine
through before presenting to the AA or court. The proposal plan by the company
and by the CoC taken into consideration but only one plan is to be preferred.
The CoC approved the proposal of the company by 66% then the proposed planned is
put further to Court or AA. But if the plan is rejected either by CoC or by AA
the proposal of the company is put off and the proposal plan that has been made
by the CoC will be approved by the court or AA. All the procedure is taken place
under or maximum to 330 days.
How IBC Is Strategically Used?
The company used the process of IBC in a strategically manner that, they will
get leverage for the negotiation. The word "BANKRUPTCIES" always have a negative
approached when we listen, but as the awarded by the filing of bankruptcies the
companies used it has tool for the negotiation from their creditors.
When a bankruptcy is filed the outcome of it would always amount to loss for the
creditor, so as soon as it is filed the company start taking the strategically
advantage of it. This process helps the debtor to cut into their debt, pay-in,
cost of litigation, protection for any repayment, time bared and etc. the debtor
by the time will be running the business with a cost cutting provided under the
law or awarded by the court itself.
The company can make a negotiation from its creditor like bank and other
financial institution its investor and their shareholders. The formulating plan
for the negotiation is to get the time and a rebalance of the loss into the
market. Here the important status of the process result in the "HAIRCUT", the
haircut process works when the debtor is unable to pay the liabilities as assets
aren't enough to cover the debt such circumstance gives a rise to HIARCUT by the
bank on their loan amount, tenure, and interest on them.
So if a company as a
loan of worth rs.8000cr on interest of 8% for 15 years, after the bankruptcy the
bank as to give a haircut to the company has their assets has turn into Non -
performing Assets [NPA] and bank won't be recover its loan for selling out those
assets, one option left is to haircut the loan as negotiation deal and give a
leverage to the company to get the fresh start. The whole process stated has
"Restructuring of Debts".
The recent data of the allowed haircuts have a positive impact for companies but
not well for the creditor itself, the recent study by THE HINDU in their paper
stated about the loss due making by the creditor on the haircut is almost to 70
to 90%. Which makes them into an immense pressure to cut down the costing, as
court also focus on the profitability of the company to get the value high so
the amount settlement can be high.
This lead to lower interest rate than the market value and company enjoys the
strategically moves for their company where the burden get shifted to the
creditor for the money. The litigation process also come to hold where the
company saves a lot of expenses and time to put for the growth of the company.
The Burden of contracts of company gets a hold of it, the company gets a clear
indication to prioritize the contract, lease, and agreement they need to
continue or to get rid off it. When the company is in the process of the
restructure of debts, the flexible a company gets with its terms and condition
to run on contracts the unwanted leases and contracts gets terminated and the
merger or the demerger of the company opens a lot of new way to get a hold of
The leading example was the merger of the 2 leading companies of Telecom
industries Vodafone and Idea turns into VI. The merger gets the ideal fast
network of the Vodafone by the towers connectivity and Idea gets the customers
usage as one of the contract terms. The previous contracts and future agreements
were terminated by both of the companies. The value also gets a bear pull in the
stock market with share percentage under Nifty 50 if the valuation of the
company is huge, as the case of the recent merger in the Indian Market was of
HDFC bank and HDFC Credila Financial Services and HDFC Life Insurance and HDFC
ERGO General Insurance made the HDFC owning nearly 20% or even more of the Nifty
50 market making it has one of the billionaire making stocks.
The Merger or Demerger makes company management change which also get a
strategically correct for the new company and the restructure of it. The new
Investor, Shareholder or institution gets a fresh start which makes the company
in a better position to start on. The management changes get full of the
employee and employer to start with new terms and might hire a new staffs and
less pay grade and other company goodwill's make it more valuable in the market
The Strategically using and implementation of the bankruptcies and resolution
makes the company gets a comeback where the investor, shareholders, bondholders,
Institutions gets a higher chance of recovery. Later to this the banks were
restricted to invest in the company that has been filed for the insolvency and
no amount of such good loan should be granted, but after the IBC the Bank itself
invest in the company by acquiring the share of the company or by IPOs, they put
on the more money to recover the loss they getting from the company knows as
"Balancing of Market/Funds/Losses".
Why Fraud In Bankruptcies?
The company when it is going through the process of liquidation the assets of
the company is sold for the price of penny to dollar to get the payment of the
creditor done. The court starts this process after the submission of all assets
details of company by the IP or IPRs. But as the assets are valuable to the
company and helps to function, company plays a vital card of selling the assets
or either way they conceal the assets.
The concealment of assets works when company is trying to hide the assets from
the court during the proceedings, they sell the assets with a bare amount of
consideration to the 3rd party in order to protect it from the IPs and Court and
later they can have used the property or the assets. The assets can be movable
and immovable, tangible or un tangible the idea behind is to hoard it from the
deployment of it.
As the court ask for pre sales agreement's or agreements made under the process
of CRIP or at the time frame of resolution in amount to be accurate with all the
sales agreement of the company. Such action amounts to the fraud as it involves
the knowledge of the entity regarding the assets and they did to amount it for
fraud in the eyes of law.
The Barraging skills for the company is always being on if the most important
tool for the survival in the market, as the case maybe when a company knowingly
take a complete leverage of the situation of the restructuring of the debts they
tend to push the creditor to make a settlement with the lowest point possible in
the market as stated earlier the Haircuts by the bank investors on their money
has to be put-on for the company comeback makes the barraging unfair for the
The term unsecured loans as been familiar where the loan has been granted
without any securities and such loan is taken by the company with an interest of
not paying it back, and if the company filed for the bankruptcy the loans money
will be out of the hands, so they try to settle in the less amount for the loan
to avoid complete loss to the business. The amount paid be the fraction of the
amount to the creditor for instance the amount lies for the transaction was of
rs.5000cr and the unsecured debt the barraging will make it down to even paying
the 1/10 rs.500cr to the creditors.
The Bust-out method of the corporate company used the method of Bust-out for
embezzling the money as used a complex structured of companies to channel the
money. The working of method starts by formulating a company which will over
turned or fail the very outset of it, created to run a business for some time
just to build up the market and to increases the number creditor and the amount
of investor to company. The primary aim of such companies is to create a large
amount of cash flow structure.
Once the company is set with the credits supply, it suddenly starts its orders a
rapid growth accumulating the bills of the merchandise. The process of such
spike in the orders are amount to portrait the heavy burden by the creditors and
used such to barraging in cash. The accounts of company are well manipulated to
show up a default with payments and debts and used the leverage to bargain and
then embezzled the money into the companies' web network and channel the money
out of the parent company.
This lead to parent company to file for the
bankruptcies for the first place which eventually saves them from the heat of
creditors and put a hold for atleast 1 to 2 years before any resolution or
liquidation take place of the company. As the company has a limited liability
the promotor of these companies gets rich and flew away. The Kingfishers
airlines, Nirav Modi and etc. can be a great example for Bust-out fraud.
The Bleed-out pattern of the company is a prolonged period of the Bust-Out
method has it is more short period of time the Bleed-out pattern take a long
process to take place. The insider management plays a vital role in such
patterned methodic because has it is concerned in takes up a lot of time to
stable the transaction that cannot be caught.
The method holds an insider person of the company regulating the bills and
allowance of other expenditures to the agreements and agencies that do no exits
or any work related to such stated status has been taken place in such prolonged
period of time. Similarly, the collusion works in the firms and corporates the
method is controlling one of the creditor to file for the bankruptcies, as we
have learned earlier the bankruptcy can be filed for debtor or the creditor
itself and such collusion depicts that company has gone under a bankruptcy that
is involuntary that makes them render the market and gain the market value this
makes the investors being in the dilemma that an involuntary action has stated
but a fraudulent approach by the company makes it has a fraud itself and cause
- Go First Airlines
The Go First is the aviation venture of India's Wadia Group, which is part of
one of the country's oldest conglomerates with extensive operations in a variety
of industries. Leading brands in the Wadia group include the 150-year-old The
Bombay Burmah Trading Corporation Limited, the 140-year-old Bombay Dyeing and
Manufacturing Company Limited, the 102-year-old Britannia Limited, the
66-year-old National Peroxide Limited, and the decade-old Wadia Reality Private
Limited. Go First is a low-cost carrier (LCC) that aspires to make air travel
more economical and accessible to the general public. Go First was founded on
April 29, 2004, and its inaugural flight from Mumbai to Ahmedabad took place in
Between September 2018 and September 2019, our airline was the industry leader
in on-time performance for 15 months in a row.
Facts of case:
Early this month, another booming private airline was suddenly grounded due to
different concerns, making it the 11th in a decade to tumble from the skies.
The Go First budget airline's owners, the Wadia Group, launched voluntary
insolvency resolution procedures before the National Company Law Tribunal (NCLT),
sending shockwaves throughout the aviation industry.
Go First was plagued by a peculiar problem: the purported failure of the jet
engine manufacturer, Pratt & Whitney, USA, to supply engines/spares for its
aircraft, which grounded nearly 40% of the fleet for several months before it
was forced to completely suspend operations beginning in the first week of May
While the DGCA issued a show-cause notice to the carrier for its abrupt measures
that caused chaos for thousands of passengers, Civil Aviation Minister
Jyotiraditya Scindia appeared sympathetic to Go First's engine troubles.
While stating that the government was doing all possible to assist, Scindia also
asked Go First to make alternative travel arrangements for its passengers to
prevent inconveniencing them.
According to Go First, the IBC application was prompted by a "increasing number
of failing engines supplied by PW," which resulted in the grounding of about 25
of its 61 Airbus A-320neo aircraft, or over 40% of its fleet, by April 30, 2023.
According to an aviation official, after the NCLT considers the Go First
application, it may designate an interim Resolution Professional to take over
and restart operations, noting that a similar exercise with another grounded
private carrier failed to take off in 2019.
Though Go First's promoters invested around Rs 3,200 crore in the last three
years, totaling nearly Rs 6,500 crore, plus support from the government's
emergency credit line guarantee, all of this failed to help as the airline
continued to incur 100 percent of its operational costs, and it 'succumbed' with
a total loss of Rs 10,800 crores.
The 17-year-old airline, which operated 32 flights to 29 domestic and 10
international destinations, has asked the NCLT for several interim orders,
including restraining the lessors from taking back their aircraft, any adverse
action by the DGCA, suppliers of essential goods and services, and so on.
Since commencing low-key operations as 'Go Air' in November 2005, Go First has
progressively risen to become the fifth largest private carrier, consistently
profitable and expanding until the PW 'engine difficulties' began in December
2020, affecting its operations and forcing it to ground in May 2023. (JOHN,
- VI Company
Vodafone Idea Limited is a joint venture between Aditya Birla Group and Vodafone
Group. It is India's largest telecom service provider. The company offers voice
and data services throughout India on 2G, 3G, and 4G platforms. With a vast
spectrum portfolio to meet the growing demand for data and voice, the firm is
dedicated to delivering wonderful customer experiences and contributing to the
creation of a genuinely 'Digital India' by enabling millions of individuals to
connect and build a better tomorrow. The company is building infrastructure to
bring newer and smarter technologies, preparing retail and enterprise clients
for the future with innovative services that are easily available through an
ecosystem of digital channels as well as extensive on-ground presence.
Fact Of Case:
The Vodafone Case Study: outlines the reasons for and the situation around
Vodafone and Idea's merger. This merger was first announced in March of this
year. Following that, in July 2018, the Department of Telecommunications
approved the merger. Finally, on August 31, 2018, the merger was completed, and
the company was renamed Vodafone Idea Limited.
This was India's largest telecom merger. Vodafone owns 45.2% of the company,
Aditya Birla Group owns 26%, and the rest holdings are owned by the public.
Comprehend The Reason Behind The Vodafone Idea Merger.
The primary motivation for the Vodafone-Idea merger is to counter Reliance Jio's
increasing influence in the telecom market. Jio has promised to provide free
services for the first six months. As a result, it began to capture the majority
of the market.
Second, Jio's free services sparked a pricing war among telecom operators (due
to the industry's oligopoly market structure).
As a result, in the event of a price war, a merger boosts confidence in
companies that gain from synergies.
Finally, the merged firm of Vodafone and Idea was projected to command a
significant market share.
However, the news of the merger produces a negative image in the public eye;
when the Vodafone and Idea merger was revealed, Idea prices began to fall. And
Idea's share price has fallen from Rs. 97.70 on March 20, 2017 to Rs. 81.81 on
September 6, 2017.
However, the merger was significant since it provided help to the two companies,
who were battling to thrive in the industry. Combined resources will assist in
competing with only the two largest brands (Jio and Airtel).
The first step was Aditya Birla's purchase of 4.9 percent of Vodafone's stock.
This would equate to Rs. 3874 crore, with each share worth Rs. 108. This would
enable Idea increase its shareholding capacity to 26 percent.
While Vodafone controls 45.1 percent of the shares in the merger, Idea would be
able to buy another 9.6 percent at a cost of Rs. 130 per share over the next
four years in the Vodafone Case Study:.
If Idea is unable to come up with an amount equivalent to Vodafone's
shareholding %, it may proceed and purchase the number of shares required at the
Kumar Mangalam Birla would be the newly formed company's chairman. Vodafone, on
the other hand, had selected the Chief Financial Officer. Following that, a new
CEO was appointed for both companies.
Finally, the promoters of both businesses have the authority to appoint three
board members. In the Vodafone Case Study: of the Vodafone and Idea merger, the
board has 12 members, six of whom are independent. (JOHN, 2021)
- Dewan Housing Finance Ltd. - US$13.93 billion
Rajesh Kumar Wadhawan founded Dewan Housing Finance Ltd. (DHFL) in 1984 as a
non-banking financial enterprise. The organization was founded to assist low and
middle-income individuals in obtaining house financing in India's tier 2 and
tier 3 cities. After HDFC, DHFL was established as the second housing finance
firm. Rajesh Kumar Wadhawan founded Dewan Housing Finance Ltd. (DHFL) in 1984 as
a non-banking financial enterprise. The organization was founded to assist low
and middle-income individuals in obtaining house financing in India's tier 2 and
tier 3 cities. After HDFC, DHFL was established as the second housing finance
According to the expose, DHFL routed Rs. 31,000 crores from loans to numerous
shell businesses for the personal advantage of its promoters, including Kapil
Wadhawan, Aruna Wadhawan, and Dheeraj Wadhawan. According to the expose, DHFL
routed Rs. 31,000 crores from loans to numerous shell businesses for the
personal advantage of its promoters, including Kapil Wadhawan, Aruna Wadhawan,
and Dheeraj Wadhawan. Initially, the company refuted these allegations, but
Indian credit rating agencies upheld DHFL's excellent safety rating. However,
the company's behavior said otherwise. They began selling a variety of
enterprises in order to pay off their debt. Later that year, DHFL missed bond
payments of Rs 900 crore.
Payments. This compelled credit rating agency to take action. The stock's price
has now dropped by more than 97%.
Due to their defaults, the RBI was forced to override DHFL's board of directors
and began processing a resolution under the Code of Insolvency and Bankruptcy
for DHFL. DHFL would shortly be taken to NCLT as well. In the background,
investigations found more unsettling information. (JOHN, 2021)
In 2010, investigations tracing the trail of money led to Sunblink real estate.
This led them to gangster Iqbal Mirchi, a Dawood Ibrahim associate. By December
2019, DHFL was in bankruptcy court for failing to pay Rs 90,000 crores in debt,
and their promoters had been imprisoned on money laundering accusations.
Meanwhile, the RBI had authorized the DHFL acquisition.
- Bhushan Power And Steel - US$6.9 Billion
Bhushan Power & Steel Ltd. (BPSL) was created in 1970 and has since grown to
become one of the country's leading steel production enterprises. Between 2007
and 2014, the majority of the company's expansion demands were covered through
loans. These loans were utilized to cover working capital requirements, purchase
plant and machinery, and other expansion-related operations. As a result, the
company raised around Rs. 47,204 crores from 33 banks and other entities.
Despite this, the corporation maintained solid growth and fair earnings. This
would have meant that the loans were being put to good use. However, BPSL
consistently missed payment dates.
The CBI began examining the company in April 2019, and it was later revealed
that the money was moved to 200 shell companies. This resulted in massive NPAs
for the banks, bringing the company into the National Company Law Tribunal (NCLT).
BPSL was subsequently auctioned off to JSW Steel, who presented a repayment plan
of Rs. 19,700 crores. This meant that banks lost 60% of their loan proceeds.
- Essar Steel (US$6.9 billion) - Biggest Bankruptcies in India
Essar Steel was a subsidiary of the Essar business, which was founded in 1969
and is controlled by the Ruia family. The company first fell into debt when it
underwent Corporate Debt Restructuring for a debt of Rs. 2,800 crores in 2002.
Essar, fortunately, survived and was back on track by 2006.
Essar resumed its aggressive expansion aspirations. Unfortunately, these plans
were impeded by delays in environmental licenses and a lack of natural gas. By
2015, Essar was once again engulfed in debt, this time totaling Rs 42,000 crore.
Plans to save the corporation were thwarted by falling commodity prices.
Essar was named in June 2017 as one of 12 stressed accounts identified by the
RBI as requiring insolvency action under the IBC. As a result, the corporation
was referred to the National Corporation Law Tribunal (NCLT). Essar Steel was
auctioned off and eventually purchased jointly by Arcelor Mittal and Japan's
Nippon Steel. Arcelor Mittal Nippon Steel India (AM/NS India) was the new name
for the corporation. (JOHN, 2021)
- Lanco Infra - US$ 6.3 billion
Lanco Infra was created in 1986 by Lagadapati Amarappa Naidu and his nephew
Lagadapati Rajagopal, who was also a Lok Sabha member. The Company's growth in
its first year was unparalleled, as it acquired several significant contracts,
primarily in construction.
Soon after, the corporation expanded into other fields like as electricity
generation, transportation, solar energy, coal mining, and so on. Lanco was one
of the world's fastest growing companies by 2010. It was also India's first
independent power producer and its largest private power provider. Following
various policy reversals implemented by the UPA government in 2012, which were
otherwise promoted by them, Lanco's business suffered greatly.
According to India Energy Exchange, the monthly average merchant power costs in
January 2012 were around 3 per unit, down from a peak of 10.78 per unit in April
Lanco's sales quickly declined, making it harder for the company to obtain bank
financing. Due to its weak financials as of March 2017, 60% of its expenses were
Lanco Infra was listed in June 2017 as one of 12 stressed accounts presented by
the RBI that would have to go through insolvency proceedings under the IBC.
Lanco, once India's largest infrastructure business, was facing insolvency
proceedings before the NCLT. (JOHN, 2021).
- Bhushan Steel (US$6.2 billion) - Biggest Bankruptcies in India
Brij Bhushan Singal and his sons purchased a steel mill in Sahibabad in 1987 and
established Bhushan Steel. The family swiftly expanded the firm by incorporating
sophisticated Japanese gear into their operations to manufacture steel.
The nascent Indian vehicle industry, which began to emerge in the country, aided
their expansion even more. This boosted Bhushan Steel's expansion and allowed
them to obtain clients such as Maruti Suzuki, Mahindra & Mahindra, and Tata
Motors. Bhushan Steel's client relationship also enabled it to obtain loans for
its expansion needs. However, the dream run took a turn for the worse with the
2008 financial crisis, when Bhushan Steel commodities prices began to plummet.
Bhushan Steel was already saddled with debts totaling more than 11000cr.
Steel prices had decreased below $300 by 2012, from a high of $1265 in 2008.
This impacted the steel sector as a whole, but firms were still able to obtain
loans because both banks and Bhushan were confident that prices would soon rise.
On this gamble, banks provided over Rs. 18,000 crores in new loans. However, the
good days never came. Despite further growth, the corporation was unable to keep
up with the debt, which stood at 31,839 crores, or 3.5 times its equity. The
corporation quickly fell behind on debt repayment.
Bhushan Steel was also put on the RBI's list of 12 stressed accounts that would
have to go through bankruptcy proceedings under the IBC. The company manage into
getting a merger with the TATA Steel and turn into BSL Limited. (JOHN, 2021)
- Reliance Communications - US$4.6 billion
Anil Ambani's biggest failure was Reliance Communications (RCom). Rcom, on the
other hand, was formerly one of the most competitive competitors. Anil Ambani
received RCom following the distribution of assets among the Ambani brothers
following their father's death.
One of the company's early blunders was choosing CDMA over GSM. This was a
disastrous investment because GSM technology advanced, putting CDMA behind.
However, nil Ambani was quick to recognize this and began investing in 3G and
GSM technology. This was followed by an aggressive price approach in which he
sold services at up to 60% less than rival telecom firms. This worked in his
favor because RCom was India's second largest telecom operator.
In 2008, However, RCom has already spent Rs 8,500 crore to acquire 3G spectrum
in over 13 circles. As RCom became entangled in the 2G swindle, trouble began to
The 2G fraud permitted nearly 14 participants in the business, significantly
reducing profit margins. RCom gradually lost market share and fell to fourth
place in the telecom sector by 2014. The introduction of Jio into Indian
markets, which also began providing free data services, was the final nail in
Rcom's coffin. Rcom's debt had risen to Rs 43,000 crore by 2017 from Rs 25,000
crore in 2010. According to estimates, approximately half of the company's debt
was used to purchase spectrum.
RCom ceased business in 2017 and began selling assets to repay their debt. The
company was then referred to the NCLT, and Anil Ambani is still facing a trial
over its debts. (JOHN, 2021).
- Alok Industries - US$4.1 billion
Alok Industries, founded in 1986, was one of India's premier textile makers of
world-class clothes. The company's growth and profitability remained strong.
One of Alok Industries' early missteps was borrowing Rs. 10,000 crores for
growth purposes in 2004. The worst aspect was that Alok chose to use this to
open additional plants rather than enhancing or fully utilizing their old plant.
What Alok failed to consider was the prospect of a drop in industry demand.
These issues exacerbated Alok's asset turnover; in addition to low demand, they
were subjected to cutthroat competition. Alok made another blunder by joining
the real estate industry in 2007.
It purchased properties in Mumbai's Lower Parel. Following the 2008 financial
crisis, the real estate market suffered.
Consistent losses and mounting debt exacerbated Alok's situation. Lanco Infra
was listed in June 2017 as one of 12 stressed accounts filed by the RBI that
would require insolvency action under the IBC. Alok Industries owed a total of
Rs. 30,000 crores to its creditors. With a proposal of Rs. 5000 crores, Reliance
and JM Financial Asset Reconstruction Company won the auction for the company.
- Jet Airways - US$2 billion
Jet Airways was the country's largest and longest-serving private airline.
Founded in 1992, the airline was the first to operate a fleet of Boeing 737-400
aircraft. It even operated 650 flights per day at its peak. When Jet went
bankrupt, many wondered if any airline could ever operate financially in India.
This was because Jet had followed Kingfisher's demise. Jet, too, fell victim to
the airline industry.
One of the key causes for the Jet's demise was the airline's massive fuel
expenses. Fuel accounts for around 40% of an airline's expenses. When aviation
fuel prices rise, it is not necessarily passed on to customers.
When aviation fuel prices rise, this is not necessarily passed on to customers.
This is due to the fact that no player has a large enough market share to impact
the pricing. As a result of the competition, the airlines' profit margins are
In addition, Jet suffered from the rupee's depreciation. International airlines
are affected since they must now pay more in dollars to other countries for
rent, maintenance fees, and refueling charges at international airports. The
rupee was also dubbed "Asia's worst-performing currency."
These problems finally contributed to the Jet's demise. (JOHN, 2021)
Data Structure Analysis
Bank Debts - [Bank No. 137 In Toto]
The fig 1 shows the total (Toto) of banks are active is 137 in India which owns
up to 346 LK.CR of loan or a bad debt to the companies and other individual. The
willful payments only a count of 3% rs16044 and 40 to 41% growth has been noted
under recent year itself
The bad debts by the banks or some instance they be the creditor for the company
suffers a huge loss in the market too. The valuation of the Toto market of banks
and the cash flow system gets default and suffers with a great liquidation of
money which increases the free flow of money in market resulting in Inflation
and lower value of money
Top Indian Bank Losses
The evaluation of Indian Top Bank Losses has been clearly depicted as the
valuation of fig 2 is in crores, the loss amount of our financial institution
has been burden up in the economy of the nation.
The fig 2 holds some of the top banks in India which has suffered huge losses
due to factors of restricted debt liquidation, restructure of debts, bust-out
method of fraud and non-repayment of loan or bad debt. The SBI being the most
suffrage of loss due to holding a larger amount of market value and being one of
the wealthiest bank in India, followed by other banks like HDFC, AXIS, ICICI,
PNB, IDBI, BOB, UBI, these banks has undergone several bank mergers too and the
amount of bad debt has nearly 4lakh crores.
The banks play a vital role in the country economics as not only corporates need
money for IPOs, market stocks and etc purpose but government and other consumer
also go bank for the needed money. As bank hold an atmost importance some big
banks like Silicon Valley bank, Credit Suisse are some bank where the assets
fallen down eventually being unable to handle the liability of the banks itself.
Data Of Company Under IBC [Liquidatioin & CRIP]
As mentioned earlier the data was the visual representation of the company that
has been under the process of IBC. The process under IBC initiated with CRIP
process first and then turn into liquidation, might court as the case maybe
initiate liquidation itself.
The data portrait the number of the company from 2017 to 2023 has been
formulated over this year.
The further data in Orange portrait the number of companies that has been
liquidated by the time with years and the data taken by the IBC Official website
The Grey data output the CRIP process where the cases are still being pursue by
the court with years and the data taken by the IBC Official website
The data of chart is a visual representation in real time where the company got
formulated, liquidated or Processed under the IBC.
- Government, I. (2023). https://ibbi.gov.in/en/claims/claim-process?page=14. Retrieved from https://ibbi.gov.in: https://ibbi.gov.in/en/claims/claim-process?page=14
- Iordache, R. (2023). Switzerland faced a full-scale bank run if Credit Suisse went bankrupt, Swiss regulator argues. Switzerland faced a full-scale bank run if Credit Suisse went bankrupt, Swiss regulator argues, 1-5.
- John, N. (2021). India's Fallen Billionaires. India's Fallen Billionaires, 08.
- Juneja, P. (n.d.). https://www.managementstudyguide.com/. Retrieved from https://www.managementstudyguide.com/stages-of-descent-into-bankruptcy.htm: https://www.managementstudyguide.com
- Juneja, P. (n.d.). https://www.managementstudyguide.com/bankruptcy-as-a-strategy-part-1.htm. Retrieved from https://www.managementstudyguide.com: https://www.managementstudyguide.com/bankruptcy-as-a-strategy-part-1.htm
- MANI. (2023). Why Do Airlines Operate At A Loss? The Best Airline Stock [India]. Why Do Airlines Operate At A Loss? The Best Airline Stock [India], 1-8.
- Munjal, D. (2022). The Insolvency and Bankruptcy Code (IBC)- where does it stand today? The Insolvency and Bankruptcy Code (IBC)- where does it stand today?
- SEGAL, T. (2023). Corporate Bankruptcy: How It Works, What It Means for Investors. When company files Chapter 7 or Chapter 11, investors often lose out, 1-7.
- Sinha, S. (2023, MARCH 28). https://www.thehindubusinessline.com/money-and-banking/public-sector-banks-wrote-off-91000-cr-in-9-months-of-fy23/article66671983.ece. Retrieved from https://www.thehindubusinessline.com: https://www.thehindubusinessline.com/money-and-banking/public-sector-banks-wrote-off-91000-cr-in-9-months-of-fy23/article66671983.ece
- Team, T. I. (2023). When company files Chapter 7 or Chapter 11, investors often lose out. When company files Chapter 7 or Chapter 11, investors often lose out, 1-6.
- Diksha Munjal the hindu- The Insolvency and Bankruptcy Code (IBC)- where does it stand today Oct 2022
- By Adam Hayes Reviewed By Eric Estevez 8 Bankrupt Companies That Came Back Updated March 22, 2023
- The Hindu Article By The Hindu
- Diksha Munjal The Hindu- The Insolvency And Bankruptcy Code (Ibc)- Where Does It Stand Today Oct 2022
- Diksha Munjal the hindu- The Insolvency and Bankruptcy Code (IBC)- where does it stand today Oct 2022