India Ratings and Research (Ind-Ra) believes that the expectations of a meaningful improvement in insolvency recoveries and resolution timelines are yet to be reflected in operating outcomes. While resolution activity under the Insolvency and Bankruptcy Code (IBC) remains steady, creditor recoveries are broadly in line with historical trends and timelines stay elevated. Cases yielding resolution plans during 1QFY27 took an average 931 days, excluding periods excluded by the adjudicating authority, while creditor realisation stood at 28.6% of admitted claims.

Ind-Ra believes recovery timing remains a key constraint on recovery efficiency, particularly for stressed-asset portfolios where delayed resolutions can defer cash flows and erode underlying value. For security receipts backed by non-performing assets (SR) ratings where insolvency is the main resolution strategy, recovery timing is as important as the ultimate recovery value.

Recoveries to Remain Stable: Ind-Ra expects claim-level recoveries to remain broadly range-bound in the near term. During 1QFY27, 69 Corporate Insolvency and Resolution Process (CIRPs) yielded resolution plans involving admitted claims of INR124.43 billion, against which creditors realised INR35.57 billion, translating into recoveries of 28.6% of admitted claims, 136.7% of liquidation value, and 112.0% of fair value. Cumulatively, creditors have realised INR4,350 billion across 1,484 approved resolution plans, equivalent to 30.5% of admitted claims.

While these outcomes demonstrate the value-preservation benefits of resolution over liquidation, aggregate recovery metrics are broadly consistent with the post-IBC experience, providing limited evidence of a structural improvement in creditor recoveries.

Resolution Preference to Deepen as Creditors Prioritise Value Preservation: Ind-Ra believes creditor behaviour is likely to increasingly favour resolutions over liquidations, with the resolution‑to‑liquidation ratio rising to 1.3x in 1QFY27 (FY26: 0.9x), marking a shift toward restructuring-led value preservation. While the spike in 1QFY27 could be a one-off, the ratio has been trending upwards. A sustained ratio above 1x would indicate maturing creditor strategies and growing confidence in resolution mechanisms.

Extended Timelines Remain the Dominant Risk: The more notable trend remains the persistence of elongated resolution timelines. Resolution plans approved during 1QFY27 took an average 931 days to reach approval, compared with 619 days for the cumulative FY26 pool, while cases entering liquidation during the quarter took an average 897 days. In addition, around 76% of ongoing CIRPs had already crossed the 270-day threshold as of June 2026.

Ind-Ra believes the continued build-up of ageing cases indicates that execution bottlenecks are prevalent across the insolvency ecosystem. For creditors, prolonged resolution cycles can materially affect both the value and timing of recoveries, particularly where enterprise value depends on continued operations and preservation of underlying assets.

Resolution Approval Does Not Always Translate into Immediate Recovery: Ind-Ra has observed across several SR transactions that approval of a resolution plan often represents an important milestone rather than culmination of the recovery process. Cash recoveries may continue to be delayed by implementation requirements, pending applications, litigation or other procedural matters. Consequently, the timing of recovery realisation can differ materially from the timing of plan approval, making execution risk a key monitorable in insolvency-linked SR transactions.

Legacy Assets Continue to Influence Aggregate Outcomes: Recovery outcomes continue to be influenced by a large stock of legacy distressed assets. Around 42% of CIRPs yielding resolution plans were previously with Board for Financial and Industrial Reconstruction (BIFR) and/or were defunct prior to CIRP commencement. Creditors realised 17.52% of admitted claims in these cases, compared with 33.30% for entities that were operational at insolvency commencement. Ind-Ra believes this divergence highlights the importance of asset quality in determining recoveries. Going-concern businesses continue to demonstrate materially superior outcomes relative to defunct or asset-light entities, suggesting that aggregate recovery metrics may continue to be weighed down by resolution of legacy distressed assets.

Expectations of Improvement Remain Ahead of Observable Trends: Recent legislative and regulatory changes have strengthened the insolvency framework and may support value preservation over the medium term. However, available data does not yet indicate a meaningful acceleration in recovery timelines or a material improvement in recovery outcomes.

Ind-Ra therefore believes market expectations of faster recoveries remain ahead of observable trends. The key monitorable is whether newer insolvency cohorts demonstrate shorter resolution cycles and faster conversion of approved resolution plans into realised recoveries. For SR investors, improvements in recovery timing are likely to have a greater impact on transaction performance than incremental changes in headline recovery percentages alone.