India has seen a big rise in business failures over the past few years. As of 2016, the Insolvency and Bankruptcy Code (IBC) came into effect. Since then, many businesses have had to face the harsh reality of bankruptcy. As a legal framework, the IBC lets companies either settle their debts or sell off their assets. This article discusses some major bankruptcies in India, their causes, and safety measures companies can take to avoid financial distress.
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Why Do Companies Go Bankrupt in India?
There are many reasons why companies in India face bankruptcy. Poor money management, too much debt and economic downturns are the most common reasons. Not being able to adapt to changes in the market, bad management and making bad decisions are also things that can lead to bankruptcy. Companies that do not keep their cash flow in check or adapt to more competition often end up in financial trouble.
Bankruptcy is not just the result of one bad decision; it is usually the outcome of multiple issues over time. High debt, poor management, and external challenges can put a company in a vulnerable position. Once a company fails to meet its obligations, it may have no choice but to declare bankruptcy.
List of Major Company Bankruptcies in India
Particularly since the Insolvency and Bankruptcy Code (IBC) was put into place in 2016 India has seen a number of significant corporate bankruptcies. The IBC was meant to make it easier for businesses to do their work and get rid of stressed assets more quickly. Here is a full list of all the big Indian companies that have attempted bankruptcy
1. Dewan Housing Finance Ltd. (DHFL)
Year: 2019
Debt: ₹91,000 Crore
Reason for Bankruptcy: DHFL was one of the biggest companies in India that lent money for homes. It was about to go bankrupt because it was not managing its money well and had a lot of debt. The company filed for bankruptcy in 2019 after falling behind on its loans.
Outcome: Piramal Group acquired DHFL after a lengthy insolvency process.
2. Bhushan Steel
Year: 2017
Debt: ₹56,000 Crore
Reason for Bankruptcy: Bhushan Steel, a big steel company, could not handle its debt. The company went bankrupt because it did not pay back loans and did not manage its money well.
Outcome: Tata Steel acquired Bhushan Steel through its subsidiary Bamnipal Steel Ltd.
3. Essar Steel
Year: 2017
Debt: ₹49,000 Crore
Reason for Bankruptcy: Essar Steel, a well-known steel manufacturer, defaulted on loans due to heavy debt and declining steel prices. It faced financial difficulties and was unable to repay its obligations.
Outcome: ArcelorMittal acquired Essar Steel after a long resolution process.
4. Jet Airways
Year: 2019
Debt: ₹8,000 Crore
Reason for Bankruptcy: Due to rising operational costs, poor management and fierce competition from low-cost airlines, Jet Airways was on the verge of bankruptcy. Insolvency resulted from its inability to pay back its debts.
Outcome: The airline was grounded in 2019 and the resolution process is still ongoing.
5. Alok Industries
Year: 2017
Debt: ₹29,000 Crore
Reason for Bankruptcy: Alok Industries, a prominent textile manufacturer, was overwhelmed with debt. The company struggled with low demand and financial mismanagement, leading to bankruptcy.
Outcome: The company was acquired by Reliance Industries and JM Financial Asset Reconstruction Company.
6. Lanco Infratech
Year: 2017
Debt: ₹44,000 Crore
Reason for Bankruptcy: Losses from failed projects and bad management put Lanco Infratech, a construction and infrastructure company, in poor financial shape. Its debt load got too high for the company to handle and it went bankrupt.
Outcome: The company entered liquidation, and its assets were sold off.
7. Videocon Industries
Year: 2018
Debt: ₹45,000 Crore
Reason for Bankruptcy: Videocon, a big name in consumer electronics, moved into new areas without properly managing risks. The business was losing a lot of money and could not pay back its loans.
Outcome: Videocon entered liquidation proceedings, and its assets were auctioned to recover debt.
8. Go First Airlines
Year: 2023
Debt: ₹6,521 Crore
Reason for Bankruptcy: Go First Airlines was having a hard time because it had high costs to run, bad management, and a lot of competition in the airline business. In the end the airline could not get back on its feet financially.
Outcome: The National Company Law Tribunal (NCLT) ordered the liquidation of Go First Airlines in January 2025.
9. Amtek Auto Group
Year: 2017
Debt: ₹12,000 Crore
Reason for Bankruptcy: Amtek Auto was one of the biggest companies that made auto parts. But the company went bankrupt because it had too much debt and made bad financial decisions.
Outcome: The company’s assets were sold under the IBC process to recover the dues of creditors.
10. Realty Firms (Jaypee Infratech, Unitech)
Year: 2020
Debt: Varies
Reason for Bankruptcy: Many real estate companies faced bankruptcy due to delayed projects, financial mismanagement, and a slowdown in the real estate market. Jaypee Infratech and Unitech were among the major realty firms to go bankrupt.
Outcome: These companies faced liquidation, and their assets were sold to recover debts.
Reasons for Bankruptcy in India
An organization's inability to meet its financial obligations is often caused by a number of different issues. Even though every bankruptcy is different, there are a few reasons why companies in India fail
1. Excessive Debt
One of the primary causes of bankruptcy is high levels of debt. Companies borrow extensively to finance their operations or expansion. However, if the business fails to generate enough revenue, paying off the debt becomes impossible, leading to insolvency.
2. Poor Financial Management
Poor financial management is the reason why many businesses fail. This includes not planning well, making bad budgets and not keeping an eye on cash flow on a regular basis. Poor management can cause big losses and, in the end, bankruptcy.
3. Increased Competition
Businesses that do not adapt to the times often have a hard time. Strong competition can hurt a company's market share and profits especially if it does not come up with new ideas or change with the times.
4. Economic Recession
Economic downturns, such as the 2008 global financial crisis or the COVID-19 pandemic, have led to widespread bankruptcies. During recessions, consumer spending falls, and many companies struggle to stay afloat due to decreased demand.
5. Legal and Regulatory Issues
Legal and regulatory issues can lead to financial strain. Companies that face lawsuits, regulatory fines or tax-related issues often face a significant financial burden, which can lead to bankruptcy.
Safety Measures to Prevent Bankruptcies
Even though it can be hard to stay out of bankruptcy, there are some things that businesses can do to lower their risk and protect their operations. Here are some important plans
Debt Management
Companies must manage their debt carefully. They should avoid borrowing excessively and ensure that they can repay loans comfortably. Regular assessment of debt levels and repayment schedules is necessary to avoid defaulting.
Financial Planning and Budgeting
Businesses should make good budgets and plans for their money. Check your cash flow, income, and expenses on a regular basis to avoid spending money you don't need to. Companies will be able to plan for the future and stay financially healthy if they use financial forecasting.
Diversification
Companies should not rely on a single product or market. Diversifying their revenue streams helps spread the risk. By entering new markets or offering new products, companies can avoid putting all their eggs in one basket.
Regular Audits
Audits done on a regular basis can help find money problems early on. Companies can find inefficiencies and ways to improve before they become big problems by doing internal and external audits.
Risk Management
Using a risk management strategy is important for a business to stay alive. Companies should look for possible risks and make plans for what to do if something goes wrong. They will be ready for things like economic downturns or natural disasters that come up out of the blue.
Innovation and Adaptation
To remain competitive businesses must constantly innovate. Keeping up with technological advancements, changing consumer preferences and industry trends will help a company avoid obsolescence and bankruptcy.
Building Strong Relationships with Creditors
Businesses should have good relationships with the people who lend them money. This can help you get good terms and avoid disagreements that could bankrupt you. Key things are clear dealings and regular communication.
Maintaining Liquidity
Ensuring the business has enough liquidity to cover short-term expenses is vital. A healthy cash flow will enable a company to meet its financial obligations without falling into debt.
Summary
In India, more people have gone bankrupt in the last few years. Companies have money problems because of bad management, too much debt and outside factors like recessions. But companies can stay out of bankruptcy by using good money management techniques, keeping track of their debt and adapting to changes in the market. Companies can stay out of bankruptcy and have long-term success if they plan well and manage their risks.
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List of Company Bankruptcies in India FAQs
Q1. What is bankruptcy?
Bankruptcy is a legal procedure in which a company or individual cannot pay debts, resulting in the liquidation or reorganisation of assets.
Q2. How does bankruptcy impact a business?
Bankruptcy may result in the sale of assets, loss of ownership, and shutdown of business activities. It can also impact the reputation and capacity to obtain future capital.
Q3. Can businesses avoid bankruptcy?
Yes, businesses can prevent bankruptcy through sound financial planning, effective management of debt, diversification of revenue streams and implementation of robust risk management practices.
Q4. What is the fate of a business during bankruptcy in India?
If a business becomes bankrupt in India, it comes under the process of the Insolvency and Bankruptcy Code (IBC). It might either settle its debts by restructuring or sell its assets.
