IBBI Tightens Real Estate Insolvency Rules for Homebuyers

The Insolvency and Bankruptcy Board of India (IBBI) has tightened insolvency rules for real estate companies, shifting the focus towards project completion, home delivery and stronger homebuyer oversight.

The amendment introduces project-level assessments, clearer possession timelines and a mechanism to exclude individual projects from insolvency proceedings.

Project-Wise Resolution Gets Greater Focus

The changes have been notified under the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) (Fifth Amendment) Regulations, 2026.

They follow recommendations made in April 2026 by a committee led by Jayanti Prasad, which proposed 155 measures across 55 issues concerning real estate insolvency.

Under the revised framework, creditors holding at least 66% of the voting share can recommend that an individual real estate project be excluded from the corporate insolvency resolution process (CIRP).

The recommendation must include recorded reasons, after which the resolution professional is required to approach the adjudicating authority.

The project-wise approach is intended to focus insolvency resolution on developments that need intervention, while reducing disruption to other projects of the same developer.

Independent Assessments Before Bidding

Before inviting expressions of interest from potential bidders, the resolution professional must obtain independent assessments of each project.

These assessments will cover construction status, pending regulatory approvals, funding requirements and risks that could affect completion.

The assessment must also provide realistic timelines for construction completion and home delivery.

The information is intended to help prospective resolution applicants evaluate the project and prepare their plans.

According to the committee report cited in the amendment coverage, India had 221 ongoing real estate insolvency cases involving approximately 1,08,887 homebuyers as of September 30, 2025.

Possession, Claims and Delivery Timelines

Resolution plans must explain how homebuyers’ claims will be addressed, including through possession, title transfer, refunds or other arrangements.

Plans must specify completion and possession timelines at the project, phase or tower level, as applicable, and provide for periodic progress reports to the monitoring committee.

The rules also address eligible requests for possession and registration during CIRP.

Creditors may grant in-principle approval, allowing the resolution professional to process eligible requests as they arise rather than seeking a separate decision for each buyer.

Plans must also account for homebuyers whose claims have not been submitted but are included in the information memorandum.

Homebuyers to Join Monitoring Committees

The amendment strengthens homebuyer participation in the resolution process. Homebuyers will have representation on monitoring committees responsible for overseeing implementation of resolution plans.

Representatives of the relevant Real Estate Regulatory Authority (RERA) and competent authorities may also join, where applicable and subject to their agreement.

Creditors’ meeting minutes must record concerns raised by authorised homebuyer representatives. The resolution professional must also share consultation minutes with creditors, improving the record of buyers’ views during the process.

Project-Level Financial Reporting

The revised rules reinforce project-wise financial oversight. They require reporting of receipts and payments for individual projects and explicit compliance with RERA requirements governing the use of funds during insolvency.

The measures aim to improve transparency and accountability while addressing the distinct needs of homebuyers, whose primary expectation is often completion and delivery of their homes.

Homebuyers can also refer to the RERA information resource for related regulatory information and the home ownership guide for broader homebuying guidance.

Key Takeaways

• IBBI’s revised rules prioritise project completion and home delivery in real estate insolvency.
• Creditors with at least 66% voting share can recommend excluding an individual project from CIRP, subject to adjudicating authority consideration.
• Independent assessments must address construction, approvals, funding needs, risks and completion timelines.
• Homebuyers gain representation on monitoring committees, while resolution plans must specify possession timelines and claim treatment.

Enjoyed this update? Visit PropTech Pulse for more real estate news, investment insights and property market trends.