IBBI rolls out project‑wise insolvency framework The Insolvency and Bankruptcy Board of India (IBBI) announced on Saturday a set of amendments to the regulations governing the Corporate Insolvency Resolution Process (CIRP) for real‑estate developers. The changes are designed to treat each development as a distinct financial entity, thereby improving the chances of timely and transparent resolution of stressed projects.
Core changes to the resolution process - **Separate project accounts**: A distinct bank account must be opened for every real‑estate project of a debtor undergoing insolvency. The resolution professional (RP) will present project‑specific financial data to the Committee of Creditors (CoC) and must comply with the fund‑utilisation requirements of the RERA Act. - **Technical and cost‑to‑complete assessments**: With CoC approval, the RP will appoint independent experts to evaluate the technical status and remaining costs of each project before any expression of interest is invited. These assessments become part of the information memorandum shared with potential bidders. - **Enhanced disclosures**: The information memorandum must now contain comprehensive, project‑wise details on completed units, under‑construction phases, and occupancy status. - **Home‑buyer participation**: Authorized representatives of home‑buyers are required to submit minutes of their meetings with creditors to the RP, which will then be tabled before the CoC. A home‑buyer representative will also sit on the monitoring committee that oversees implementation of the resolution plan. - **Project‑wise resolution plans**: Each plan must outline phase‑ or tower‑wise timelines for completion, delivery and possession, with periodic progress reports to the monitoring committee.
How the amendments address existing challenges Stalled or delayed real‑estate insolvencies have left many home‑buyers without possession and created uncertainty for creditors. By isolating projects that truly need intervention, the new rules aim to protect completed and occupied units from unnecessary disruption. The requirement for separate accounts and detailed cost assessments is expected to curb misuse of funds and improve confidence among bidders, creditors and home‑buyers alike.
Procedural backdrop Under the Insolvency and Bankruptcy Code (IBC), a Resolution Professional or Interim Resolution Professional steers the insolvency process, while the CoC decides on the resolution plan. The plan must receive approval from the National Company Law Tribunal (NCLT), which acts as the adjudicating authority. The IBBI’s amendments refine how these bodies handle real‑estate cases, adding layers of transparency and stakeholder involvement.
Industry reaction and next steps Industry observers note that the amendments could make distressed real‑estate assets more attractive to investors by providing clearer project‑level data and reducing the risk of fund diversion. Home‑buyer groups have welcomed the formal inclusion of their representatives in the monitoring committee, seeing it as a step toward safeguarding their interests.
Looking ahead The IBBI has indicated that the new regulations will come into effect shortly, though exact implementation dates were not disclosed. Ongoing insolvency cases will need to align their processes with the revised rules, and the NCLT will play a pivotal role in approving project‑wise resolution plans.
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