Stressed Assets & Resolution
Portfolio due diligence, Security Receipt valuation, and advisory for India's stressed asset ecosystem — ARC portfolios, IBC resolution cases, SARFAESI assets, and NPL securitisation.
Market context and instrument landscape.
India's stressed asset market has been transformed by the IBC, SARFAESI, and RBI's revised stressed-asset securitisation guidelines. ARCs manage Security Receipt portfolios; IBC has created an institutional market for distressed acquisition and resolution bidding. Recovery rates have climbed to 32–43% of admitted claims — materially above pre-IBC norms — but timelines routinely exceed the statutory 330 days, averaging over 600. RBI's 2023 ARC revisions raised minimum net owned funds and mandated NAV-based SR valuation, bringing fresh scrutiny to a sector where carrying values have sometimes lagged recoveries.
- ▸Security Receipts (SRs)
- ▸NPL Pool Securitisation
- ▸IBC Resolution Plan Modelling
- ▸SARFAESI Enforcement Assets
- ▸Distressed NCD Positions
- ▸ARC Portfolio Analytics
- ▸Written-Down Loan Portfolios
- ▸One-Time Settlement Scenarios
What practitioners face in this market.
Security Receipt NAV determination
SR NAV requires estimating recovery under uncertain legal proceedings, asset deterioration, and haircut assumptions. Inflated carrying values compound over time — ARCs face sudden write-downs when cases resolve below expectation.
IBC resolution timeline uncertainty
NCLT timelines routinely exceed 330 days. Each month of delay reduces NPV by the discount rate and raises the risk of asset deterioration — particularly for infrastructure assets where interim resolution professionals may lack operational expertise.
Haircut benchmarking
Resolution plans must provide at least liquidation value to dissenting creditors, but liquidation value is itself contested. Benchmarking against IBBI's published case data provides an independent reference for voting and bid calibration.
ARC portfolio due diligence
ARC portfolios are heterogeneous — CIRP at various stages, SARFAESI enforcement, OTS negotiations, written-down positions. Each requires a distinct analytical framework, and correlation of recovery outcomes across similar assets must be assessed.
Collateral deterioration and environmental liability
Industrial properties securing stressed exposures accumulate environmental liabilities, deferred maintenance, and encroachments during extended resolution. Current physical assessment is essential — original security valuations are often years stale.
Cross-creditor dynamics and waterfall modelling
With secured banks, unsecured bondholders, and operational creditors all in the CoC, waterfall modelling requires IBC jurisprudence literacy alongside financial modelling — priority rules, CIRP interest treatment, and minimum payout mandates.
Arrowbanc's work in this asset class.
SR valuation
Independent Security Receipt valuation using scenario-weighted DCF — resolution, partial recovery, and liquidation scenarios with explicit probabilities and timelines. Aligned to RBI's ARC valuation framework and updated as case progress warrants.
Resolution plan modelling
Financial modelling of proposed IBC resolution plans — upfront payment, haircut analysis, business plan feasibility, and NPV differential against liquidation. Used by creditor committees evaluating competing plans and applicants calibrating bids.
Bid advisory
Independent analysis for resolution applicants — valuing the target, sizing the bid, structuring upfront versus deferred consideration, and designing performance-linked payment mechanisms to manage downside risk.
ARC portfolio due diligence
Position-by-position review before acquisition or SR investment. Each position categorised by recovery stage and assessed with stage-specific assumptions from published IBC performance data, yielding a probability-distributed NAV.
SARFAESI enforcement analytics
Property valuation benchmarking, auction review, and recovery timeline estimation. Where auctions have failed, we analyse demand constraints — title defects, access, pricing — and advise on restructuring the enforcement approach.
One-time settlement structuring
Economic analysis of OTS proposals — NPV of accepting versus continuing enforcement, borrower payment capacity, and counter-offer structuring. A framework for decisions that otherwise rely on negotiating intuition.
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