HAIRCUT: COUP DE GRACE THE INTENTIONS OF THE INSOLVENCY & BANKRUPTCY REGIME IN INDIA!

Paper Number :WP66/2026
Publication Date :July 21, 2026

Insolvency and Bankruptcy Code, 2016 is one of the major economic reform in India. Discharging debt through bankruptcy is the bedrock principle of insolvency systems across the globe. The discharge of honest insolvent has come to be regarded as the all-important feature of bankruptcy statute. Methodical and probable Insolvency & Debt resolution mechanism leads to financial inclusion, credit availability, job upholding and new job opportunities in the market. This mechanism ensures the survival of the distressed companies.

According to the new record of Insolvency and Bankruptcy Board of India till date 987 resolution plans have been invited. Further, as per the Economic Times news NCLT has approved 180 resolution plans in the FY 2023 of total Rs. 51,424 crores. Though the resolution plans of various corporate debtor are approved by the NCLT, in many cases it is approved with the huge haircuts and the average haircut until now has been 65% under Corporate Insolvency Resolution Process.

This paper analyses the issue of ‘haircut’ under the IBC ecosystem. It also evaluates the Videocon Industries Ltd. case where NCLT had approved a resolution plan with 95% haircut.