India’s insolvency law has bankers going bald

If harsh haircuts on bankrupt assets weren’t bad enough, India’s lenders must now be going bald with worry. A recent court order has raised the unpleasant prospect of having to return the money new owners paid them to settle the unpaid loans of insolvent firms — years later.The nation’s nine-year-old insolvency code has struggled with delays and poor recoveries. A third of the bankruptcies admitted by the tribunals have gone for liquidation, while three-quarters of the cases still open in December had exceeded the prescribed 270-day mark for resolution. Creditors have recouped only 31% of the $133 billion of bad debt they pursued under the law. In many instances, even after finding buyers for troubled assets, banks have had to…