IBBI Introduces Key Reforms to Real Estate Insolvency
The Insolvency and Bankruptcy Board of India (IBBI), through the IBBI (Insolvency Resolution Process for Corporate Persons) (Fifth Amendment) Regulations, 2026, has introduced significant changes to the corporate insolvency resolution process (CIRP) of corporate debtors having real estate projects. The amendments seek to address the complexities associated with real estate insolvencies through project-wise financial management, enhanced disclosures, greater participation of homebuyers and more structured implementation of resolution plans.
The amendments are accompanied by IBBI Circular No. IBBI/CIRP/110/2026, which further prescribes measures for ensuring compliance with the Real Estate (Regulation and Development) Act, 2016 (RERA), and transparency in the conduct of CIRP.
- Project-Wise financial management and accountability
The substituted Regulation 4D mandates the Interim Resolution Professional (IRP) or Resolution Professional (RP) to operate a separate bank account for each real estate project of the corporate debtor. The RP is also required to place project-wise statements of receipts and payments, together with other relevant financial information, before the Committee of Creditors (CoC) at such intervals as the CoC considers appropriate.
Further, the IRP/RP is required to ensure compliance with the fund utilisation requirements under RERA during CIRP. These measures are intended to ensure that funds attributable to individual projects are accounted for separately and utilised in accordance with the applicable regulatory requirements, thereby strengthening financial discipline and protecting project-specific stakeholder interests.
- Project-Wise exclusion from CIRP
Another significant development is the introduction of Regulation 4F, which provides a framework for identifying and recommending the exclusion of individual real estate projects from CIRP where the corporate debtor has multiple projects.
The RP is required to place project-wise information before the CoC at its first meeting, including RERA registration details, stage of completion, possession and occupancy status, and the number of completed and incomplete units.
Based on such information, the CoC may, by a vote of not less than 66% of the voting share, recommend to the Adjudicating Authority the exclusion of a particular project from CIRP, recording its reasons. The RP is thereafter required to file an application before the Adjudicating Authority.
- Mandatory Technical and Cost-to-Complete Assessment
Under newly inserted Regulation 4G, the RP, with prior approval of the CoC, is required to appoint suitably qualified and independent professionals to undertake a project-wise technical and cost-to-complete assessment.
Such assessment must cover, inter alia, the physical status of construction, regulatory approvals and compliances, sold and unsold inventory, estimated completion costs, milestone-wise funding requirements, realistic completion timelines and material risks affecting the project.
Further, the assessment must be completed before issuance of the invitation for expression of interest under Regulation 36A and incorporated into the Information Memorandum (IM) for access by prospective resolution applicants.
Such assessment reports provide prospective resolution applicants with a reliable assessment of the financial and operational requirements of each project, facilitating more informed and commercially viable resolution plans.
- Enhanced disclosures and greater participation of Homebuyers
The amendments substantially expand the project-wise disclosures required in the IM under Regulation 36. These include details of sanctioned, completed and under-construction units, sold and unsold inventory, construction progress, common facilities and amenities, statutory approvals, project-wise encumbrances, pending litigations, statutory dues, regulatory proceedings, penalties and complaints, and balances in designated RERA bank accounts.
The IM must also disclose details of allottees whose claims are reflected in the corporate debtor’s books or RERA records but have not been submitted to the RP. Further, it must capture the project-wise preferences of allottees, including those seeking possession, refund, conveyance or other relief.
In order to ensure that homebuyers’ concerns are formally represented and considered during the resolution process, amendments are also made strengthen the role of Authorised Representatives (ARs) of creditors in a class. The choice of ARs offered to class of creditors must now include their brief profiles and an explanation of their roles and duties. ARs are required to submit minutes of their meetings with creditors to the RP, who must place them before the CoC at its next meeting. The minutes of CoC meetings must also record the views, concerns and opinions expressed by ARs on behalf of the creditors in the class.
- Greater oversight during implementation of Resolution Plans
The substituted Regulation 38A prescribes mandatory project-wise contents of resolution plans, including the treatment of allottee claims through possession, execution of conveyance deeds, registration or transfer of title, refund or other appropriate means. Resolution plans must also provide for the treatment of allottees whose details are available in the IM but who have not submitted claims. Further, project-wise, phase-wise or tower-wise timelines for completion and delivery of possession must be specified, along with periodic progress reporting to the Monitoring Committee.
- Additional Compliance Requirements under the IBBI Circular
The accompanying IBBI Circular reinforces the regulatory obligations of insolvency professionals in real estate CIRPs. The IRP/RP must ensure compliance with applicable RERA provisions and may invite the concerned RERA authority to furnish its views on the regulatory compliance, feasibility and implementation aspects of resolution plans under consideration by the CoC.
Further, within seven days of appointment, the IRP/RP must ensure prominent disclosure of the commencement of CIRP through signboards at each project site and notice boards at the registered office, corporate office, site office, sales office and other offices accessible to stakeholders. Such disclosures must contain the name and contact details of the IRP/RP and remain displayed until conclusion of CIRP.
The IRP/RP is also required to obtain available project-related information from the concerned RERA portal, including registration details, sanctioned plans, allottee records, designated bank account status and regulatory approvals. Such information may be relied upon, subject to verification and reconciliation, where the corporate debtor’s records are incomplete, unavailable or inconsistent.
Conclusion
The Amendment Regulations mark a significant shift towards a more project-centric approach to real estate insolvency under the IBC. By introducing project-wise financial segregation, technical assessments, enhanced disclosures and structured stakeholder participation, the amendments seek to make resolution processes more transparent, informed and implementation-oriented.
More importantly, the framework recognises that real estate insolvencies involve interests extending beyond financial creditors and require meaningful consideration of homebuyers’ expectations, project completion requirements and regulatory compliance. The effectiveness of these reforms will ultimately depend on their implementation by insolvency professionals, CoCs and the Adjudicating Authorities, particularly in balancing project-level resolution and RERA Act provisions with the collective insolvency framework under the Code.
