Realisation under the Insolvency and Bankruptcy Code (IBC) has slipped to about 25% as of September 2025 from 30% in the previous quarter, signalling weakening recovery efficiency in stressed-asset cases, India Ratings and Research said in a report. The agency also noted a deterioration in the resolution-to-liquidation ratio and record-long insolvency timelines, underscoring the need for urgent reforms.

The agency said that the ratio of resolution to liquidation cases also fell to 0.7 times in September end 2025 in comparison to 0.9 times in the quarter prior to that. A low resolution-to-liquidation ratio points to a lesser number of business turnarounds through IBC as compared to the outright asset sales.

“Legacy issues continue to weigh on the system. Insolvency timelines remain stretched and are at record-high level, mainly due to capacity constraints at adjudicating authorities, frequent litigation, and uneven execution across jurisdictions. Delays in admission, limited bandwidth at NCLT benches, and procedural challenges continue to erode value in stressed assets and lengthen the resolution cycle,” the report said.

As per Ind-Ra, the timeline for CIRP (corporate insolvency resolution process) are increasing for financial creditors (FCs), operational creditors (OCs), and corporate debtors (CDs), and it has now reached its highest period since FY21. For instance, the timeline recorded in the second quarter of FY26 was 729 days for FCs, 739 days for OCs, and 627 days for CDs. Further, the report said that liquidation remains the dominant mode of closure at 43% of the total IBC cases.

Further, the agency said that the proposed IBC amendment bill, revised valuation templates, enhanced disclosure norms for prospective resolution applicants, and clearer guidance on dealing with PMLA-attached assets indicate strengthening process discipline and reducing avoidable friction to enhance recovery timelines and quantum.

These changes aim to bring uniformity in valuation, improve bidder transparency, streamline plan approval, and reduce scope for procedural disputes. Ind-Ra believes that while the impact will unfold gradually, these measures mark a shift towards a more structured and information-driven insolvency ecosystem that can support faster decision-making and more consistent recovery outcomes,” it said.