Business & Finance
IBBI Allows Exclusion of Healthy Real Estate Projects from Insolvency Proceedings
India’s insolvency regulator has introduced rules that let creditors exclude financially sound real‑estate projects from a developer’s insolvency case. Under the new provisions notified by the Insolvency and Bankruptcy Board of India (IBBI) on 30 October, a committee of creditors (CoC) can recommend that individual projects be removed from the Corporate Insolvency Resolution Process (CIRP) even if the developer as a whole is in insolvency. The recommendation must be approved by creditors holding at least 66 % of the voting share and must receive clearance from the National Company Law Tribunal (NCLT). The rules, which take immediate effect, aim to protect homebuyers and other stakeholders by allowing more targeted resolution of projects. They also require the resolution professional to present detailed project‑wise information to the CoC, including registration status, construction stage, possession and occupancy, and the number of completed and incomplete units. The CoC can then recommend exclusion of one or more projects, provided the required voting threshold is met and the NCLT approves. The framework also mandates a separate bank account for each distressed project, periodic financial reporting to the CoC, and compliance with Real Estate (Regulation and Development) Act (RERA) fund‑utilisation rules. Additionally, the new rules give the CoC greater flexibility to approve homebuyers’ possession requests and to appoint independent professionals to assess each project’s technical condition and cost to completion. The changes address concerns that the blanket moratorium imposed by CIRP can halt construction and delay registrations for healthy projects. Several developers, including Raheja Developers, Supertech, Today Homes and Ajnara, are currently facing bankruptcy proceedings, and real estate accounts for 22 % of cases undergoing resolution, making it the second‑largest sector after manufacturing. The regulator stated that the new rules “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.”