Jet Airways was once India’s pride.

Its aircraft connected continents. Its brand was recognised across the world. Thousands of employees depended on it, and lenders believed that even if the airline had stumbled financially, it still possessed immense commercial value.

When Jet entered the Insolvency and Bankruptcy Code (IBC) process in 2019, many believed the new insolvency regime would deliver precisely what it had promised Parliament in 2016, a swift rescue of a viable business.

Instead, the rescue itself became trapped inside the system.

A resolution plan was approved by creditors in 2021. Yet disputes between lenders and the successful bidder delayed implementation for years. Aircraft remained grounded. Valuable airport slots were lost. Employees dispersed. Customers moved on. By the time the litigation finally ended, there was little left to revive.

In 2024, the Supreme Court ordered liquidation.

The tragedy was not merely that Jet Airways failed.

The tragedy was that the insolvency process outlived the business it was supposed to save.

Jet is no longer just one insolvency case.

It has become a symbol of the larger question confronting India’s insolvency framework as the Insolvency and Bankruptcy Code completes a decade.

Has the IBC stopped working?

The answer is both yes and no.

A Revolutionary Law

When the Insolvency and Bankruptcy Code was enacted in 2016, it fundamentally altered India’s credit culture.

Before the IBC, recovery proceedings often dragged on for years, sometimes decades. Banks remained locked in endless litigation while defaulting promoters frequently continued to control the very companies that had failed to repay lenders.

The IBC changed that equation.

Control shifted from promoters to creditors.

Strict timelines were introduced.

Professional insolvency managers replaced existing management.

Most importantly, Section 29A ensured that defaulting promoters could not simply buy back their companies through the insolvency process.

For the first time, default carried genuine consequences.

The law quickly earned international recognition and was widely regarded as one of India’s most significant economic reforms.

Ten years later, remarkably, none of those foundational principles has been seriously questioned.

The problem lies elsewhere.

The Law Has Not Broken. The System Around It Has.

There is a tendency to describe disappointing outcomes as evidence that the IBC itself has failed.

That diagnosis is too simplistic.

The legislation remains fundamentally sound.

What has weakened is the machinery responsible for implementing it.

The tribunals are overburdened.

Vacancies remain unfilled.

Hearings stretch endlessly.

Resolution plans approved by creditors wait months and sometimes years for judicial approval.

The result is paradoxical.

The Code continues to frighten borrowers.

It no longer reassures creditors.

Creditors Are Quietly Leaving

Nothing illustrates this better than the latest numbers released by the Insolvency and Bankruptcy Board of India (IBBI).

During FY2025-26, only 665 corporate insolvency cases were admitted.

That is the weakest performance since the Code came into force, excluding the pandemic period when new insolvency proceedings were legally suspended.

The comparison with FY2022-23 is striking.

Admissions have fallen from 1,262 to 665 in just three years.

Nearly half the demand for the country’s flagship insolvency framework has disappeared.

Corporate distress has certainly not disappeared.

The forum through which it is being resolved has.

The Silent Exit of Small Businesses

Perhaps the most revealing trend does not concern banks at all.

It concerns suppliers.

One of the principal objectives of the IBC was to empower operational creditors, the small businesses supplying goods and services to larger corporations.

Initially, they embraced the Code enthusiastically.

Today they appear to be abandoning it.

Operational creditor filings have fallen by 62 percent, declining from 538 cases in FY23 to only 207 cases in FY26.

Their share of overall insolvency filings has shrunk from more than half of all cases to barely one-third.

For many small businesses, the promise of a quick and affordable insolvency remedy appears to have faded.

The Code is gradually becoming what it was never intended to be, a recovery mechanism dominated almost exclusively by financial institutions.

Even Distressed Companies Prefer Other Routes

Equally telling is the behaviour of distressed companies themselves.

If the IBC had evolved into an efficient restructuring platform, promoters facing financial stress would voluntarily seek protection under the Code.

Instead, only 47 companies initiated insolvency proceedings against themselves during the entire financial year.

That figure speaks volumes.

Corporate India increasingly appears willing to attempt almost any alternative before entering the formal insolvency system.

Time Is Destroying Value

The cornerstone of the IBC was speed.

Parliament prescribed an outer limit of 330 days for completion of insolvency proceedings.

Reality bears little resemblance to that ambition.

The average insolvency case today takes 744 days.

That is not a minor procedural delay.

It represents a complete collapse of the statutory timetable.

Businesses cannot remain commercially healthy while waiting more than two years for legal certainty.

Factories deteriorate.

Key employees leave.

Customers shift to competitors.

Technology becomes obsolete.

Enterprise value steadily evaporates.

Every additional month reduces the chances of meaningful revival.

Delay is therefore not merely an administrative inconvenience.

It fundamentally alters the economics of insolvency itself.

Even the Supreme Court Has Sounded the Alarm

The judiciary has repeatedly acknowledged the scale of the problem.

The Supreme Court recently observed that 363 approved resolution plans remained pending before NCLT benches, with delays ranging from 48 days to an astonishing 738 days merely for judicial approval.

The Court described the situation as “extremely dismal.”

It identified inadequate infrastructure, half-day sittings and mounting backlogs as principal causes.

These observations reinforce an important distinction.

The Code is not being defeated by legal doctrine.

It is being defeated by institutional capacity.

Recoveries Are Losing Ground

Delay inevitably affects financial outcomes.

During the early years of the IBC, successful resolution plans generated recoveries approaching 190 percent of liquidation value.

Today that figure has declined to 167 percent.

Recoveries against admitted financial claims have also weakened, falling from above 40 percent in the early years to approximately 30 percent today.

Banks still recover substantially more through resolution than liquidation.

But the trend is unmistakably downward.

Revival Remains the Exception

The Code was enacted primarily to rescue viable businesses rather than liquidate them.

The cumulative statistics paint a sobering picture.

Nearly 9,000 insolvency proceedings have been admitted since 2016.

Yet only about 1,419 companies have emerged through approved resolution plans.

More than 3,000 companies have gone into liquidation.

Only around one in every six admitted cases ultimately achieves the objective of corporate revival.

The numbers suggest that liquidation remains the dominant outcome.

Three Companies Tell the Entire Story

Jet Airways is not an isolated example.

Go First entered insolvency in May 2023.

Within a year, liquidation became inevitable.

Videocon Industries remained trapped in prolonged litigation while manufacturing assets steadily deteriorated.

Ultimately, creditors recovered less than five percent of their admitted claims.

Each case followed a different commercial trajectory.

Yet each illustrates the same institutional weakness.

The legal framework remained intact.

The timeline collapsed.

Why Investors Are Becoming Reluctant

The difficulties extend beyond delay alone.

Serious investors increasingly face asymmetric risks.

After spending months preparing bids and obtaining creditor approval, successful resolution applicants often wait years before receiving judicial clearance.

During this period, business conditions may change dramatically.

Interest rates fluctuate.

Market values shift.

Entire industries transform.

Yet bidders remain locked into commercial terms negotiated years earlier.

This uncertainty naturally discourages participation.

Adding to the challenge are unresolved governance issues after acquisition.

Legacy directors frequently remain on company records.

Promoters sometimes refuse to hand over books, records and operational control.

Regulatory approvals from multiple authorities continue long after the insolvency process formally ends.

For investors, uncertainty now extends well beyond the courtroom.

Delay Has Become a Litigation Strategy

One of the more troubling developments is the growing use of procedural objections as tactical weapons.

Challenges involving guarantors, technical objections and repeated procedural applications increasingly delay resolution without necessarily affecting the final outcome.

Since there are few meaningful consequences for frivolous litigation, delay itself has become an attractive strategy.

In insolvency, however, delay is never neutral.

It benefits precisely the parties who gain from preserving uncertainty.

The Market Has Already Adapted

Perhaps the clearest verdict has come not from lawyers but from lenders themselves.

Banks are increasingly choosing alternative recovery mechanisms.

SARFAESI proceedings.

One-time settlements.

Debt refinancing.

Inter-creditor agreements.

Asset reconstruction companies.

Commercial negotiations.

Wherever a quicker solution exists, sophisticated creditors increasingly prefer it.

This does not necessarily indicate declining corporate distress.

It indicates declining confidence in the formal insolvency route.

Yet Calling the IBC a Failure Would Be Wrong

Despite these shortcomings, dismissing the IBC as unsuccessful would ignore its greatest achievement.

Over the past decade, more than 30,000 insolvency petitions have reportedly been settled before admission, involving nearly ₹14 lakh crore.

These cases never appear in insolvency statistics.

Precisely because parties settled before formal admission.

In other words, the Code’s greatest success is invisible.

It succeeds by threatening consequences serious enough that many borrowers choose settlement before insolvency ever begins.

Section 29A remains central to that success.

The prospect of permanently losing control of a company has fundamentally altered promoter behaviour across India.

Fear, rather than litigation, has become the Code’s strongest enforcement mechanism.

Interestingly, another indicator offers cautious optimism.

The ratio of liquidations to successful resolutions has steadily improved over recent years, falling from approximately 2.4 liquidations for every resolution to almost one-to-one today.

The system may be handling fewer cases, but proportionately more are ending in resolution than before.

The Real Verdict

After examining both the strengths and weaknesses of the past decade, a balanced conclusion emerges.

The Insolvency and Bankruptcy Code has succeeded brilliantly as a deterrent.

It has struggled increasingly as an adjudicatory process.

Measured by the settlements it compels before admission, it has transformed India’s credit culture.

Measured by the cases that actually travel through tribunals, it has become slower, costlier and progressively less attractive.

Both propositions are simultaneously true.

What Needs Repair

The solutions do not primarily require rewriting the law.

They require making the existing law function.

Financial creditor applications based on objectively established defaults should move automatically into the insolvency process without prolonged preliminary litigation.

Frivolous objections should carry meaningful financial consequences.

Tribunal vacancies must be filled urgently.

Additional NCLT benches and full-day sittings are essential if statutory timelines are to have any practical meaning.

Approved resolution plans require strict deadlines for judicial confirmation.

Resolution applicants should not remain indefinitely bound while awaiting court approval.

The law must also provide clearer mechanisms for removing legacy directors, compelling cooperation from outgoing promoters and ensuring smooth post-acquisition transitions.

Finally, operational creditors the constituency that originally justified much of the IBC’s reform agenda need a genuinely fast-track mechanism if they are to regain confidence in the system.

The Decisive Question

The Insolvency and Bankruptcy Code remains India’s finest insolvency law.

Its greatest weakness is that it increasingly depends upon institutions unable to deliver what the statute promises.

If delays continue to become normal, the Code’s greatest strength, its deterrent effect, will eventually weaken as well.

After all, a threat retains its power only so long as people believe it will actually be carried out.

The IBC is therefore not facing a crisis of legal design.

It is facing a crisis of execution.

And unless that execution improves, India’s most celebrated insolvency reform risks becoming remembered less for the businesses it rescued than for the opportunities it could not save.