The Insolvency and Bankruptcy Board of India (IBBI) published its Report on Behavioural Impact of the Insolvency and Bankruptcy Code on 22 May 2025. The report provides an empirical assessment of how the IBC framework has influenced corporate behaviour, credit discipline, and resolution outcomes since its enactment in 2016, drawing on nearly a decade of data from insolvency proceedings across the country.
Background
The IBC was enacted in 2016 to consolidate India's fragmented insolvency framework into a time-bound, creditor-driven resolution mechanism. While individual case outcomes and aggregate recovery statistics are regularly published, the IBBI's Behavioural Impact Report represents the first systematic attempt to assess whether the Code has achieved its broader objective of altering the behaviour of borrowers, promoters, and creditors in the Indian corporate ecosystem.
The report draws on data from CIRP admissions, resolution plan approvals, liquidation orders, and pre-admission settlement patterns to evaluate behavioural changes attributable to the IBC framework.
Key Findings
The report documents the following principal findings:
Enhanced pre-admission settlements: A significant proportion of insolvency applications filed under Sections 7, 9, and 10 of the IBC result in settlement or withdrawal before admission. The report attributes this to the deterrent effect of the insolvency process on defaulting promoters, who face the prospect of losing control of their companies.
Improved credit discipline: The data indicates a measurable improvement in credit discipline among corporate borrowers, particularly in segments where IBC proceedings have been actively enforced. The threat of insolvency proceedings appears to function as a credible enforcement mechanism for debt recovery.
Aggregate recovery data: The report provides updated aggregate recovery figures for resolved cases, contextualising them against the liquidation value to demonstrate value preservation through the resolution mechanism compared to the alternative of direct liquidation.
Delay challenges: The report acknowledges that delays in CIRP completion remain a systemic challenge, with a significant proportion of cases exceeding the 330-day statutory limit. Judicial capacity constraints at NCLT Benches are identified as a contributing factor.
Implications for Practitioners
The Behavioural Impact Report provides valuable empirical ammunition for practitioners on both sides of insolvency proceedings. Creditors' counsel can cite the settlement data to demonstrate the deterrent effectiveness of filing insolvency applications, even where the ultimate objective is debt recovery rather than corporate restructuring.
For policy advocates and insolvency professionals, the acknowledgment of systemic delays reinforces the case for capacity building at NCLT Benches and procedural reforms to streamline the CIRP process. The data on pre-admission settlements is particularly useful for practitioners advising clients on the strategic value of filing insolvency applications as a recovery tool.
Corporate borrowers and their advisors should take note of the behavioural trends documented in the report, which underscore the reality that the IBC has fundamentally shifted the balance of power between creditors and defaulting promoters in India.