India’s insolvency framework has helped more than 1.4 lakh homebuyers move closer to receiving or secure possession of homes in stalled real estate projects, as financially stronger developers step in to revive distressed developments through the Insolvency and Bankruptcy Code (IBC).
According to analysts and industry officials, large developers including Adani Realty, Lodha and others have acquired or taken over distressed projects through insolvency proceedings, bringing fresh capital and execution capabilities to projects that had remained stalled for several years.
The scale of unresolved real estate insolvency remains significant. Nearly 2.5 lakh homebuyers are associated with 553 real estate insolvency cases admitted under the IBC. About 17% of these cases have been successfully resolved, while around 1.1 lakh homebuyers across 221 cases continue to await resolution.
Projects resolved under the insolvency framework represent investments of about ₹84,000 crore, while another ₹65,000 crore remains tied up in unresolved developments, according to industry estimates.
Homebuyers were recognised as financial creditors under the IBC in 2018, making the framework an important mechanism for addressing stalled housing projects.
IBBI Proposes Reforms for Real Estate Insolvency
The Insolvency and Bankruptcy Board of India (IBBI) has proposed reforms aimed at making real estate insolvency proceedings more focused on project completion rather than liquidation.
The recommendations include project-wise insolvency proceedings, ring-fencing of project cash flows, simplified claims processes and stronger coordination between RERA authorities and insolvency courts.
However, delays remain a major challenge. Prolonged litigation and multiple rounds of appeals can extend the time required to complete projects. Delays between approval of a resolution plan by the National Company Law Tribunal (NCLT) and its actual implementation can also affect project viability.
Nikhil Bhatia, Managing Director – Land & Capital Markets, CBRE India, said real estate resolutions under the IBC are slower than those in many other sectors because projects typically involve long development cycles and multiple stakeholders, including homebuyers, lenders and land partners.
He noted that successful resolution requires developers to fund construction upfront, while returns are realised later. According to him, stronger end-user demand and firmer property prices in larger markets have made some stalled projects viable for completion.
Developers Step In to Revive Distressed Projects
Gulam Zia, International Partner and Senior Executive Director at Knight Frank, said distressed real estate under the IBC is creating acquisition opportunities for financially stronger developers.
Real estate accounts for 22% of all corporate insolvency resolution process (CIRP) admissions, making it the second-largest sector. Resolution plans have, on average, realised 94.7% of the fair value assessed, according to industry estimates cited by Knight Frank.
Several large developers, including Adani, Reliance, JSW and Prestige, have participated in acquisitions or resolutions involving distressed real estate assets.
Examples of Stalled Projects Being Revived
In Mumbai’s Bandra-Kurla Complex, the Take Ten BKC luxury residential redevelopment project had stalled in 2020 following financial distress faced by its original developers. The project had affected 176 original MHADA families and hundreds of homebuyers.
Following an NCLT-led resolution, Adani Realty acquired the project and committed more than ₹1,000 crore towards completion, including over ₹400 crore of fresh capital. It also secured nearly ₹1,200 crore in construction financing. The project has since delivered completed homes to 903 buyers.
In another BKC development, Adani Realty took over the Bharat Nagar Slum Rehabilitation Project following the collapse of HDIL. Construction has resumed, with rehabilitation housing being developed for nearly 1,000 families.
In Gurugram, the Hills-77 project was revived through insolvency proceedings, enabling 724 homebuyers to receive possession. The Centre Court project, which had claims of about ₹1,250 crore, was also acquired through a resolution process and subsequently secured an occupancy certificate, benefiting more than 300 homebuyers.
The IBC route has also enabled developers to expand their commercial portfolios, with Oberoi Realty and a consortium taking over Hotel Horizon in Mumbai, while Macrotech Developers acquired V Hotels through the insolvency process.
