The Insolvency and Bankruptcy Code (IBC) saw a record number of resolutions in the fiscal year ended March 2024, but recovery rates fell and timelines got stretched, data from credit rating agency Crisil showed on Friday.

A total of 269 companies were cleared for resolution plans by the National Company Law Tribunal (NCLT), up 42 per cent from the previous year, Crisil said.

However, the average recovery rate for creditors dropped to 27 per cent from 36 per cent in the prior fiscal year, while the average resolution time increased to 850 days from 825 days.

The surge in resolutions was driven by a backlog of cases, increased investor interest in stressed assets and the appointment of additional NCLT judges.

Real estate and manufacturing sectors accounted for the bulk of resolutions.

“The higher case resolution momentum is a result of continuous efforts to improve the resolution throughput rate of IBC,” said Mohit Makhija, senior director at Crisil Ratings.

However, the NCLT is overburdened with around 4,400 cases, leading to delays. To address this, the Insolvency and Bankruptcy Board of India (IBBI) is considering introducing formal out-of-court mediation.