Insolvency and Bankruptcy Board of India ("IBBI") has notified the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) (Amendment) Regulations, 2025 ("Amendment Regulations") on February 3, 2025. The amendments seek to further streamline the corporate insolvency resolution process with a special focus on real estate projects. Prior to this, various discussion papers and subsequent amendments were brought into force.
A brief overview of the amendments made pursuant to the Amendment Regulations is as follows:
Real Estate Related Amendments:
- Handing Over Possession: The Resolution Professional, after obtaining approval of the Committee of Creditors ("CoC") with not less than sixty-six percent of total votes and upon fulfilment of all obligations by the homebuyer and where the allottee has requested for the same, can now hand over possession of plots, apartments, or buildings to the homebuyers while the resolution process is still ongoing. Thus, the distressed homebuyers would not have to wait for long periods to obtain possession of their properties.
- Appointment of Facilitators: Facilitators can now be appointed by the CoC for sub-classes within large creditor classes (i.e., where the number of creditors in a class exceeds one thousand) to ensure their effective participation in the insolvency resolution process, subject to the conditions provided in the amended Regulation 16C. The roles and responsibilities of the facilitators include facilitating communication between the authorised representative and the creditors assigned to him and providing information and clarifications to the creditors about the insolvency resolution process as entailed in Regulation 16D of the CIRP Regulations.
- Participation of Competent Authority in Real Estate Projects: The CoC can now invite 'competent authority' [as defined in clause (p) of section 2 of the Real Estate (Regulation and Development) Act, 2016 (16 of 2016)] such as NOIDA, HUDA etc to their meetings for inputs and perspectives on regulatory and land development related matters. Participation of land authorities would not only enhance the viability and feasibility of resolution plans but also build confidence among homebuyers and other stakeholders in the resolution process
- Report on Real Estate Development Rights and Permissions: Resolution Professionals must now prepare a detailed report on the status of development rights, approvals, and permissions for real estate projects within 60 days of insolvency commencement. The report would first be submitted to CoC for its comments and thereafter the same will be filed with the Adjudicating Authority. This will provide clarity on project viability thereby helping creditors make informed decisions in a timely manner.
- Relaxations for Real Estate Allottees: CoCs have now been empowered to relax certain conditions for associations or group of homebuyers to participate as resolution applicants in the insolvency resolution process, subject to the same representing not less than ten per cent. or one hundred creditors out of the total number of creditors in a class, whichever is lower. These include relaxations in eligibility criteria, performance security and deposits for submitting resolution plans
Non-Real Estate Related Amendments:
- MSME Registration Status: The Resolution Professional is now required to disclose the corporate debtor's registration status as a micro, small, or medium enterprise. This will encourage greater participation of potential resolution applicants as they can avail benefits and relaxations available for MSMEs under the Code.
- Monitoring Committee for Implementation of Resolution Plan: CoCs must now consider forming a monitoring committee to monitor and supervise the implementation of resolution plan. The committee, which may comprise of the Resolution Professional and representatives of creditors and the successful resolution applicant, must submit quarterly progress reports to the Adjudicating Authority. The proposal aims to enforce accountability and ensure timely execution of approved plans.
Author's Note:
The recent changes in the Amendment Regulations 2025 have introduced significant provisions aimed at enhancing the rights and protections of real estate allottees and provides much needed clarifications with regard to various issues which commonly arise during real-estate insolvencies, for homebuyers being the most affected class as well as for other stakeholders like land authorities etc. These amendments acknowledge the unique position of real estate investors in the insolvency framework. The amendment aims to provide a more balanced approach in resolving insolvency cases involving real estate companies, ensuring that the interests of allottees are adequately safeguarded while promoting a fair and efficient resolution process.
Please find a copy of the Regulations, here.
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