The Insolvency and Bankruptcy Board of India (IBBI) has proposed a comprehensive set of reforms aimed at making insolvency resolution in the real estate sector faster, more transparent, and more focused on completing stalled housing projects. The regulator released a discussion paper on July 1, 2026, inviting comments from stakeholders until July 21, 2026.
A major proposal is to allow completed, occupied, or unaffected projects of a real estate developer to be excluded from the Corporate Insolvency Resolution Process (CIRP). This can happen if at least 66% of the Committee of Creditors (CoC) approves the move. The objective is to ensure that financially healthy or completed projects are not unnecessarily delayed because of problems in other developments undertaken by the same developer.
To support this approach, IBBI has proposed that the Committee of Creditors conduct a project-wise assessment during its first meeting. Based on information provided by the Resolution Professional (RP), projects can be classified as completed, occupied, substantially completed, or ongoing. Projects that do not require insolvency intervention may then be recommended for exclusion from the resolution process after approval from the adjudicating authority.
The regulator has also proposed stricter financial controls to improve transparency. Resolution Professionals would be required to maintain separate books of accounts for every project and ensure that all receipts and payments are routed through designated project-specific bank accounts. This measure is intended to prevent diversion of funds and improve financial accountability during insolvency proceedings.
Homebuyer protection is another major focus of the proposed reforms. IBBI has suggested simplified claim forms for homebuyers, streamlined procedures for handing over possession, mandatory disclosure of allottee preferences, enhanced information in the Information Memorandum, and independent technical and cost-to-complete assessments for ongoing projects. The regulator also wants resolution plans to include mandatory project-specific details to improve implementation.
The proposals are consistent with recent judicial observations. In the Mansi Brar case, the Supreme Court stated that real estate insolvency should generally be handled on a project-specific basis rather than placing the entire developer under insolvency, except in exceptional situations. Earlier this year, an expert committee constituted by IBBI also recommended restricting insolvency proceedings to only stressed projects while allowing healthy projects to continue operations.
