IBBI has notified major amendments allowing the Committee of Creditors (CoC) to recommend retention or exclusion of real estate projects during CIRP by a 66% vote. The final decision on exclusion rests with the Adjudicating Authority, and homebuyers now have representation on the Monitoring Committee.
IBBI Introduces Key Amendments for Real Estate in CIRP
The Insolvency and Bankruptcy Board of India (IBBI) has notified significant amendments to the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016, specifically targeting real estate projects under Corporate Insolvency Resolution Process (CIRP). These changes, effective immediately, clarify the conditions under which real estate projects may be retained in or excluded from the insolvency estate, with the Committee of Creditors (CoC) required to pass a 66% voting threshold to make recommendations for exclusion.
Role of Adjudicating Authority and Homebuyer Representation
While the CoC may recommend exclusion of a real estate project by a 66% majority, the final decision rests with the National Company Law Tribunal (NCLT). The amendments also institutionalize representation of homebuyers by granting allottees a formal seat on the Monitoring Committee, enhancing transparency and ensuring their interests are accounted for during the resolution process. This aligns with the Supreme Court’s emphasis on treating homebuyers as financial creditors.
Practitioners must now ensure compliance with revised timelines and documentation requirements, particularly regarding project-level asset valuation and disclosure. The amendments aim to balance creditor recovery with timely resolution of stalled real estate projects, potentially accelerating redevelopment and refund mechanisms. RPs, legal advisors, and CoC members should revise their checklists to incorporate these procedural changes, especially concerning voting thresholds and reporting obligations.
