Brief Overview:

To prioritise project completion, protect homebuyers, enable project-wise CIRP and make liquidation a last resort, IBBI has proposed reforms to real estate insolvency resolution.

Technical Details:

In wake of Supreme Court’s directions in Mansi Brar Fernandes v. Shubha Sharma, IBBI formed a committee to address real estate insolvency challenges. Based on its recommendations, IBBI has proposed the following amendments to improve resolution outcomes in the sector:

Proposed Reforms

1) Identification and exclusion of real estate projects from CIRP, enabling completed, occupied or otherwise independent projects to be kept outside the insolvency process where their inclusion is not necessary for resolution.

2) Strengthening project-wise ring-fencing of funds and accounts by requiring separate books and designated accounts for each real estate project, so that receipts and payments are traceable to the concerned project.

3) Handing over possession of units to allottees

4) Simplified claim form for real estate allottees to make the filing of claims easier, more standardised and better suited to the nature of homebuyer claims.

5) Identification and disclosure of allottee preferences in real estate CIRP, so that the resolution professional can capture whether allottees prefer possession, refund or other available outcomes.

6) Mandatory disclosures in the Information Memorandum of real estate CIRP to provide project-specific details such as approvals, project status, allottee claims, costs and pending obligations to potential resolution applicants.

7) Independent technical and cost-to-complete assessment for real estate projects to objectively determine the construction status, estimated completion cost and feasibility of completing each project.

8) Mandatory contents of resolution plans in real estate CIRP to ensure that plans clearly address project completion, treatment of allottees, timelines, funding and compliance with applicable real estate laws.

9) Enhancing composition of monitoring committee in real estate cases by including stakeholders with project-level expertise and allottee representation to oversee implementation of approved plans.

10) Enhancing transparency in functioning of Authorised Representatives by requiring clearer communication, reporting and consultation with allottees during the CIRP.

11) Additional safeguards prior to liquidation of real estate projects to ensure that project completion and other viable resolution options are examined before liquidation is considered.

12) Strengthening coordination between resolution professionals and real estate regulatory authorities to align insolvency actions with project approvals, statutory compliances and RERA-related obligations.

13) Prominent disclosure of corporate insolvency resolution process at project and office sites so that homebuyers and other stakeholders are visibly informed about commencement and progress of CIRP.

JC Takeaways:

The proposed reforms are geared towards facilitating project completion, enhancing homebuyer protection and transparency, and ensuring that liquidation remains a measure of last resort. The last date for submission of comments is 21^st July 2026.

For further details, please see:

IBBI Discussion Paper- Strengthening Resolution Outcomes in Real Estate

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