Bankruptcy as Profitable “Bijness”: India’s Grand IBC Heist! by DebaprasadBandyopadhyay
Via Flickr:
onceinabluemoon2021.in/2026/04/16/bankruptcy-as-profitabl... India’s Insolvency and Bankruptcy Code (IBC, 2016) did not fundamentally break from the previous system (BIFR, SICA, DRT, SARFAESI). Instead, it refined and professionalised a political economy that protects elite accumulation. While the pre-2016 framework allowed overt promoter impunity through delays and fragmentation, the IBC has created a streamlined, time-bound, creditor-driven process. In practice, this has resulted in the socialisation of losses and privatisation of gains. Key empirical trends include: Over 8,800 Corporate Insolvency Resolution Processes (CIRPs) Average recovery rates of 31–33% Average haircuts of ~67% Realisations of over ₹4 lakh crore against much larger claims Wilful defaulters rising to ₹3.83 lakh crore by 2025 Public-sector banks, workers, SMEs, and retail investors bear most of the losses, while politically connected acquirers often buy distressed assets at steep discounts, frequently through phoenixing or procedural tactics. Landmark cases, such as Dewan Housing Finance, highlight how provisions like Section 32A (clean slate) enable the transfer of assets and future upside to new owners, despite underlying fraud, under the broad discretion granted to the Committee of Creditors’ “commercial wisdom.” Overall, rather than disciplining capital, the IBC has normalised strategic default and evolved India’s insolvency regime from chaotic promoter protection into a more efficient mechanism for wealth transfer within a crony-capitalist framework, supported by selective enforcement and taxpayer-funded bank re-capitalisation.