Bankruptcy bottleneck: 380 resolution plans approved by lenders await NCLT nod

The submission of a status report comes after the apex court mandated NCLT Principal Bench, New Delhi, to provide information at the earliest on pending resolution applications, duration of pendency and reasons why these have not been adjudicated till date, the persons cited earlier said on the condition of anonymity.

The Supreme Court sought this information while hearing a dispute between AVJ Heights Apartment Owners Association and IIFL Finance Ltd and Another on 16 April. The apex court impleaded the bankruptcy rule maker, IBBI, in the case. At the same time, proceedings are underway in the Delhi High Court regarding an arbitral award secured by IIFL against AVJ Developers.

The apex court’s direction indicates it is concerned about resolution plans already cleared by creditors taking too long to get adjudicated by bankruptcy tribunal benches.

Queries emailed to the resolution professional handling AVJ Developers (India) Pvt. Ltd and to IIFL Finance on Monday and to IBBI and NCLT on Friday seeking comments for the story remained unanswered till press time.

Debt resolution under the Insolvency and Bankruptcy Code (IBC) has been an area that has seen vigorous litigation since the law was implemented in 2016 as different parties—shareholders, financial and operational creditors, new investors and statutory authorities—took to court to protect their interests.

The Supreme Court’s concern over delays in NCLT’s approval of resolution plans underscores a widening gap between IBC’s promise of time-bound resolution and its on-ground implementation, said Subodh Dandawate, associate director, regulatory advisory at Nexdigm, a professional services firm.

Under the IBC, the maximum time to conclude a resolution process is capped at 330 days, including all extensions and legal delays.

“The (Supreme) Court’s intervention should serve as a catalyst for urgent institutional reform within the NCLT—through measures such as constituting dedicated company law benches to de-clog pendency, easing the tribunal’s burden by diverting routine matters, enforcing stricter timelines, and curbing avoidable adjournments,” said Dandawate.

According to data published by IBBI, in the April to December period of 2025, 513 new bankruptcy petitions were admitted by NCLT benches and 525 closed for various reasons, including withdrawal of petitions and settlements between parties. During the period, debt resolution plans were approved by tribunals in 182 cases. At the end of December 2025, as many as 1,879 cases are pending before tribunals at various stages.

Once a case is admitted by NCLT, the IBC provides a moratorium on recovery of dues, mandates creditors to take over management and run the company through a professional while a revival plan is explored with new investors. As part of the revival plan, creditors take haircuts in their dues which are paid as per the priority order set in law. This transition of viable companies to new owners is often complex and involves adjudicating on various claims by different stakeholders, a challenge before tribunals.

As per data published by IBBI, the 1,376 resolution plans approved so far under IBC up to December 2025 took on average 619 days. This excludes certain time periods that tribunals have not counted. About three-fourths of the ongoing cases have been pending before tribunals and courts for more than 270 days.

In the budget session of Parliament, the government overhauled the IBC to enable a quicker and more efficient debt resolution and to reduce litigation.