IBBI amends regulations to strengthen insolvency resolution of stressed real estate projects

IBBI has notified amendments to regulations providing for project-wise treatment, enhanced disclosures, stronger participation of homebuyers as well as detailed cost-assessment. | Photo Credit: designer491

To expedite real estate insolvencies, regulator IBBI has notified amendments to regulations providing for project-wise treatment, enhanced disclosures, stronger participation of homebuyers as well as detailed cost-assessment that will help attract more realistic bids.

Against the backdrop of issues, challenges and delays being faced in the resolution of stressed real estate projects that are impacting homebuyers, the watchdog has amended the regulations pertaining to insolvency resolution process for corporate persons.

IBBI is a key institution in implementing the Insolvency and Bankruptcy Code (IBC), which provides the framework for resolution of stressed assets in a market-linked and time-bound manner.

"The amendments aim to facilitate more informed and viable resolution of real estate projects, enhance transparency and accountability, and strengthen the interests of homebuyers and other stakeholders in the insolvency resolution process," IBBI said in a release on Saturday.

With the changes in regulations, IBBI seeks to strengthen project-wise financial management and monitoring, introduce technical and cost-to-complete assessment of real estate projects, and enhance disclosures relating to the projects.

Besides, the amendments aim to boost the participation of homebuyers as well as strengthen oversight during the insolvency resolution process and also provide for prescribing project-wise requirements in the resolution plan.

According to IBBI, the amended norms would facilitate identification and exclusion of real estate projects under the resolution process as well as facilitate handover of possession to homebuyers.

Certain other changes have also been effected for procedural improvements.

Under IBC, a Resolution Professional or an Interim Resolution Professional (IRP) handles the insolvency process and a decision on the resolution plan is taken by the Committee of Creditors (CoC). The plan needs to be approved by the the National Company Law Tribunal (NCLT), which is the Adjudicating Authority.

Following are the key amendments in regulations that pertain to Corporate Insolvency Resolution Process (CIRP) involving multiple real estate projects:

Financial discipline

A separate bank account needs to be maintained for each real estate project of the corporate debtor undergoing insolvency. The RP should place financial information about each project before the CoC and the fund utilisation requirement under the RERA Act should be complied during the resolution process.

This will ensure that funds contributed for a project are utilised for that project, bringing greater financial discipline and building the confidence of homebuyers and creditors in the use of project funds.

Minimising disruptions

RP should place all project-wise information, including stage of completion and status of possession and occupancy, before the CoC in its first meeting. This will help the CoC in identifying and deciding whether any project needs to be excluded from the resolution process and the same has to be approved by the Adjudicating Authority.

Such a system will enable project-wise treatment of real estate insolvencies, minimising disruption to completed and occupied projects and focusing resolution efforts on projects that genuinely require intervention.

Facilitating realistic bids

With prior CoC approval, RP should appoint independent professionals to undertake a project-wise technical and cost-to-complete assessment before inviting expressions of interest. The assessment should be part of the information memorandum of the projects and made available to prospective bidders.

The new requirements will help reduce information asymmetry among stakeholders and enable better quality and more realistic bids.

To ensure enhanced disclosures, the information memorandum should have comprehensive project-wise details, including about completed and under-construction units.

Homebuyers

The authorised representatives of homebuyers should submit minutes of their meeting with creditors to the RP, who will subsequently place it before the CoC.

The minutes of CoC meetings should record the views, concerns and opinions expressed by the authorised representatives on behalf of creditors concerned.

These measures aim to enhance transparency and ensure that the concerns of homebuyers and other class of creditors are placed before the CoC.

Oversight & project-wise needs in resolution plans

The monitoring committee for implementation of the resolution plan should have representation of the authorised representative of homebuyers and also representative of RERA concerned, subject to the authority agreeing to it.

IBBI said participation of homebuyers and regulatory authorities will help address issues relating to approvals, compliance and construction milestones in time, reducing implementation delays and disputes.

Each resolution plan should have comprehensive details, including project-wise, phase-wise or tower-wise timelines for completion and delivery of possession, as applicable.

Also, periodic progress should be reported to the monitoring committee.

Clear project-level commitments and timelines will bring greater certainty to homebuyers and reduce disputes regarding implementation of approved resolution, IBBI said.

Published on October 31, 2026