The Insolvency and Bankruptcy Board of India (IBBI) has notified major amendments enabling exclusion of real estate projects from CIRP upon a 66% vote by the Committee of Creditors (CoC), subject to adjudicating authority approval. Allottees now have representation on the Monitoring Committee, marking a shift in stakeholder balance during resolution.
IBBI Introduces Framework for Exclusion of Real Estate Projects from CIRP
The Insolvency and Bankruptcy Board of India (IBBI) has introduced significant amendments to the Insolvency and Bankruptcy (Resolution Process for Corporate Persons) Regulations, 2016, effective 31 October 2026. The changes allow for the potential exclusion of real estate projects from the corporate insolvency resolution process (CIRP) if recommended by the Committee of Creditors (CoC) with at least 66% voting share. However, such exclusion remains subject to final approval by the adjudicating authority — the National Company Law Tribunal (NCLT).
Role of Committee of Creditors and Adjudicating Authority
Under the revised framework, the CoC may pass a resolution to retain or exclude a real estate project from the CIRP. A 66% majority is required to recommend exclusion, reflecting a shift toward greater creditor control in project-specific decision-making. However, the NCLT retains discretionary power to confirm or reject the recommendation, ensuring judicial oversight in protecting broader stakeholder interests, particularly homebuyers.
Allottee Representation and Monitoring Committee
The amendments mandate representation of home allottees on the Monitoring Committee overseeing the resolution process. This institutionalizes their voice in project governance, aligning with the Supreme Court’s recognition of homebuyers as financial creditors under Section 5(8)(f) of the Insolvency and Bankruptcy Code, 2016. The move aims to balance creditor hierarchies and enhance transparency in real estate insolvencies.
Practitioners must now assess strategic options for CoC members in structuring resolutions, particularly in stalled housing projects. Legal scrutiny will likely focus on the NCLT’s standard for reviewing exclusion requests and whether such decisions are quasi-judicial or administrative. The amendments signal a move toward project-level restructuring, potentially influencing future CIRP outcomes in the real estate sector.
Citations
- Insolvency and Bankruptcy Code, 2016, Section 5(8)(f)
