Bigwigs walk away with bankrupt assets. Is there a different way?
April 21, 2026
India's Insolvency and Bankruptcy Code has become a remarkably efficient machine for concentrating industrial assets in the hands of a privileged few.
India’s Insolvency and Bankruptcy Code (IBC), which was launched with the objective of rescuing distressed assets from promoters who had made a hash of them and returning them to productive use, has led to resolution in the case of 1,376 companies in the last 10 years or so. While there haven’t been too many satisfactory resolutions, of those that did deliver, most have gone to India’s four largest conglomerates and that too at steep discounts. Effectively, the IBC has become a remarkably efficient machine for concentrating industrial assets in the hands of a privileged few.
A Mint analysis of data from the Insolvency and Bankruptcy Board of India (IBBI) shows how the Adani Group, JSW Group, Reliance Industries, and the Tata Group together accounted for a large share of these resolutions.
The steel sector is a perfect example of how this has played out. After JSW Steel Ltd. bought Bhushan Power and Steel, Tata Steel Ltd. acquired Bhushan Steel, and ArcelorMittal swept up Essar Steel, the industry shrank from 17 meaningful players to four. The deals were all great bargains, too. Consider the sheer scale of the discount: when these assets came to market, they often sold for a fraction of their replacement cost, which meant that incumbents were essentially expanding their footprint at the expense of lenders who absorbed massive haircuts.
Who gains?
While discounting a distressed asset is a legitimate instrument of insolvency law, the question is who gains the most from it.
If the same steep discounts had been accessible to mid-sized and smaller firms, it would’ve led to just the kind of accelerant that economic theory identifies as healthy for industrial development. When a growing company can acquire productive capacity, including functioning plants, trained workforces, and established supply chains, at a fraction of greenfield cost, it can scale faster, compete more aggressively, and erode incumbent pricing power. It is how challengers become meaningful competitors in a market of powerful incumbents.
South Korea’s industrial rise was partly built on second-tier chaebols acquiring distressed capacity during periods of consolidation. For example, during the 1997 Asian Financial Crisis, as the Korean government forced the restructuring of over-leveraged conglomerates, mid-tier groups (like Hanwha Group) used the opportunity to acquire chemical and financial units that had been spun off from larger, collapsing groups. This allowed these smaller entities to leapfrog into top-tier status, diversifying the industrial base. In theory, that’s what the IBC should have aimed for. In practice, it has done the opposite, reserving the discount for those who need it the least.
Deep pockets
There is a good reason for this. The Committee of Creditors, made up of banks desperate to recover as much as possible, naturally gravitates toward the highest bidder. This almost always means preferring entities with the deepest pockets and existing sectoral scale. Nothing wrong with that, but it means that smaller firms, which might deploy such acquired assets most disruptively, are effectively priced out.
What’s worse, most such bankrupt firms disappear into the conglomerates that buy them. With that, they lose their independent market identity and become just a capacity number on someone else’s spreadsheet.
Fewer players lead to stronger balance sheets for the buyers, giving them pricing power. In steel, for instance, fewer players post-IBC resolution led to stronger balance sheets for the buyers, granting them formidable pricing power.
That doesn’t mean the IBC is a wrong measure; just that CoC incentives and the resolution scoring criteria need a rethink. A mandatory weighted scorecard that credits market-share impact, post-acquisition employment commitments, and sectoral diversity alongside the bid value would widen the field. It would be the equivalent of applying an antitrust filter at the point of acquisition rather than after it’s done. The Competition Commission of India does review large IBC deals, but so far, it has shown little appetite for minute scrutiny, clearing every major steel transaction largely unconditionally.
Defenders of the current process point out that without large conglomerates’ bids, many such assets would go into liquidation, where lenders recover even less. But surely, overall economic value should include the value of a more open market which is more hotly contested, and one where the next generation of industrial challengers have a chance to actually scale up. A regime that doesn’t offer such a pathway to smaller players is slashing opportunity.
A Mint analysis of data from the Insolvency and Bankruptcy Board of India (IBBI) shows how the Adani Group, JSW Group, Reliance Industries, and the Tata Group together accounted for a large share of these resolutions.
The steel sector is a perfect example of how this has played out. After JSW Steel Ltd. bought Bhushan Power and Steel, Tata Steel Ltd. acquired Bhushan Steel, and ArcelorMittal swept up Essar Steel, the industry shrank from 17 meaningful players to four. The deals were all great bargains, too. Consider the sheer scale of the discount: when these assets came to market, they often sold for a fraction of their replacement cost, which meant that incumbents were essentially expanding their footprint at the expense of lenders who absorbed massive haircuts.
Who gains?
While discounting a distressed asset is a legitimate instrument of insolvency law, the question is who gains the most from it.
If the same steep discounts had been accessible to mid-sized and smaller firms, it would’ve led to just the kind of accelerant that economic theory identifies as healthy for industrial development. When a growing company can acquire productive capacity, including functioning plants, trained workforces, and established supply chains, at a fraction of greenfield cost, it can scale faster, compete more aggressively, and erode incumbent pricing power. It is how challengers become meaningful competitors in a market of powerful incumbents.
South Korea’s industrial rise was partly built on second-tier chaebols acquiring distressed capacity during periods of consolidation. For example, during the 1997 Asian Financial Crisis, as the Korean government forced the restructuring of over-leveraged conglomerates, mid-tier groups (like Hanwha Group) used the opportunity to acquire chemical and financial units that had been spun off from larger, collapsing groups. This allowed these smaller entities to leapfrog into top-tier status, diversifying the industrial base. In theory, that’s what the IBC should have aimed for. In practice, it has done the opposite, reserving the discount for those who need it the least.
Deep pockets
There is a good reason for this. The Committee of Creditors, made up of banks desperate to recover as much as possible, naturally gravitates toward the highest bidder. This almost always means preferring entities with the deepest pockets and existing sectoral scale. Nothing wrong with that, but it means that smaller firms, which might deploy such acquired assets most disruptively, are effectively priced out.
What’s worse, most such bankrupt firms disappear into the conglomerates that buy them. With that, they lose their independent market identity and become just a capacity number on someone else’s spreadsheet.
Fewer players lead to stronger balance sheets for the buyers, giving them pricing power. In steel, for instance, fewer players post-IBC resolution led to stronger balance sheets for the buyers, granting them formidable pricing power.
That doesn’t mean the IBC is a wrong measure; just that CoC incentives and the resolution scoring criteria need a rethink. A mandatory weighted scorecard that credits market-share impact, post-acquisition employment commitments, and sectoral diversity alongside the bid value would widen the field. It would be the equivalent of applying an antitrust filter at the point of acquisition rather than after it’s done. The Competition Commission of India does review large IBC deals, but so far, it has shown little appetite for minute scrutiny, clearing every major steel transaction largely unconditionally.
Defenders of the current process point out that without large conglomerates’ bids, many such assets would go into liquidation, where lenders recover even less. But surely, overall economic value should include the value of a more open market which is more hotly contested, and one where the next generation of industrial challengers have a chance to actually scale up. A regime that doesn’t offer such a pathway to smaller players is slashing opportunity.