Small and mid-sized real estate developers are increasingly looking at insolvency proceedings to acquire distressed property companies as land prices continue to rise in major Indian cities. Instead of purchasing expensive land parcels directly, developers are bidding for companies that come with ongoing projects, development rights and, in some cases, valuable urban properties.
The trend has become more visible in Mumbai, Delhi-NCR and Bengaluru, where availability of fresh land parcels is limited and acquisition costs remain high. Recent approvals by the National Company Law Tribunal (NCLT) indicate growing interest in distressed real estate assets.
According to data from the Insolvency and Bankruptcy Board of India (IBBI), 8,987 companies had been admitted for resolution under the Insolvency and Bankruptcy Code (IBC) up to the end of March. Of these, 1,977 companies, or about 22%, belonged to the real estate sector.
However, acquiring a distressed developer through insolvency proceedings involves several risks. Potential buyers need to examine land titles, project approvals, pending litigation, construction obligations and claims from lenders, homebuyers, contractors and other creditors.
NPS Chawla, co-founder of AEKOM Legal, said that redevelopment has become increasingly competitive, with larger developers entering the segment. He also cautioned that acquiring a distressed developer does not necessarily mean that a stalled project will quickly become profitable.
A recent example is the acquisition of Radius & Deserve Land Developers by Bharadvaja Buildcon LLP, a joint venture of Aspect Group. The company had admitted liabilities of more than ₹3,255 crore, while the successful bidder submitted a resolution plan to revive the business.
Sandeep Shetye, president, business development, Aspect Real Estate Developers, said NCLT acquisitions can provide access to established projects and development rights, but buyers also take on operational and execution challenges. He stressed the need for due diligence covering approvals, liabilities and project execution status.
Other recent transactions also highlight the growing competition for distressed assets. The NCLT approved Oriental Structural Engineers’ acquisition of Accil Corporation, which operates the Holiday Inn Jaipur City Center and had admitted liabilities of ₹895 crore. Oriental Structural Engineers proposed ₹288 crore under its resolution plan.
In another case, the Chennai tribunal approved the acquisition of Amar Prakaash Developers by Aadarsh Kumar Surana. The company had admitted liabilities of ₹1,157 crore, while around a dozen bidders had expressed interest.
The NCLT also approved Mantra Properties and Developers’ resolution plan for Siddhi Raj Housing Projects after around 20 prospective buyers expressed interest.
For smaller developers, insolvency acquisitions can offer an entry route into established urban markets without purchasing land at current market prices. However, the value of such opportunities depends on the quality of assets, regulatory status, liabilities and the feasibility of completing stalled projects
