IBBI Introduces New Insolvency Rules for Real Estate Projects to Protect Homebuyers and Improve Transparency
The Insolvency and Bankruptcy Board of India (IBBI) has revised its insolvency regulations for companies involved in real estate projects. The new rules require separate bank accounts for individual projects, independent cost assessments and greater representation of homebuyers and regulatory authorities in the monitoring process. The changes aim to improve transparency, financial accountability and project completion during insolvency proceedings.
IBBI insolvency rules for real estate projects:-The Insolvency and Bankruptcy Board of India (IBBI) has introduced important changes to the insolvency framework for real estate companies. The amendments to the IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2016, focus on making the insolvency process more transparent and better organised, particularly for companies handling multiple real estate projects.
The revised rules clearly define the responsibilities of resolution professionals (RPs) when a real estate developer enters the Corporate Insolvency Resolution Process (CIRP).
These changes are significant for homebuyers, developers, financial institutions and other stakeholders involved in stalled or financially stressed real estate projects.
IBBI insolvency rules for real estate projects:- Separate Bank Accounts for Every Real Estate Project
One of the major changes requires resolution professionals to maintain separate bank accounts for each real estate project managed by the corporate debtor.
This will help ensure that funds belonging to one project are not mixed with money from another project.
Resolution professionals must also provide reports on project finances and fund utilisation whenever required by the Committee of Creditors (CoC).
They will be responsible for ensuring that the use of funds for each project follows the applicable legal requirements, including relevant provisions of the Real Estate (Regulation and Development) Act, 2016 (RERA).
This step is expected to improve financial discipline and make it easier to track how money is being used for construction and project development.
IBBI insolvency rules for real estate projects:- Clarity on Multiple Projects During Insolvency
Many real estate companies develop several projects at the same time. Under the amended regulations, if a company has multiple projects, the resolution professional must provide the necessary project-wise information to the Committee of Creditors.
Based on these details, the CoC will decide whether a particular real estate project should be included in or excluded from the insolvency process.
This provision aims to allow better project-level assessment instead of treating every project in the same manner.
IBBI insolvency rules for real estate projects:- Independent Experts to Assess Project Completion Costs
The revised regulations also require resolution professionals to appoint independent professionals to assess individual real estate projects.
These experts will estimate the cost required to complete the remaining construction work.
Such assessments can help creditors and other stakeholders understand the financial requirements of unfinished projects and evaluate possible resolution plans more effectively.
For homebuyers waiting for possession, an accurate assessment of construction costs can play an important role in finding practical solutions for completing stalled developments.
Greater Transparency for All Stakeholders
IBBI has also strengthened the information-sharing requirements under the insolvency framework.
Resolution professionals must ensure that all relevant entities involved in or connected with the insolvency process are informed about the commencement of the Corporate Insolvency Resolution Process.
The objective is to ensure that stakeholders receive important information at the appropriate time and remain aware of developments during the resolution process.
IBBI insolvency rules for real estate projects:- Homebuyers and Regulatory Authorities to Get Representation
Another important feature of the amended rules relates to the composition of the monitoring committee.
The revised provisions require the inclusion of:
- An authorised representative of creditors in a class, including homebuyers, selected through the applicable majority-voting process.
- A representative of the concerned Real Estate Regulatory Authority (RERA).
- A representative of the relevant authority under the applicable law.
The inclusion of these representatives is intended to improve coordination and bring greater accountability to the monitoring of real estate resolution plans.
It also provides an important role for homebuyers and regulatory authorities in the monitoring framework.
IBBI insolvency rules for real estate projects:- New Requirements for Resolution Plans and Project Reports
The amendments also specify the information that must be included in resolution plans for companies having real estate projects.
In addition, the rules establish mandatory details that must form part of the project details report submitted to the Committee of Creditors.
These requirements are expected to help creditors make better-informed decisions by providing a clearer picture of each project’s financial position, construction status and completion requirements.
IBBI insolvency rules for real estate projects:- New Rules Effective from October 30, 2026
The amended regulations came into effect on October 30, 2026, the date of their notification.
With these changes, IBBI has taken another step towards improving the insolvency resolution framework for the real estate sector.
The new provisions focus on project-wise financial management, independent assessments, stronger monitoring and better stakeholder participation.
For India’s real estate sector, these changes could help improve the handling of financially distressed developments and create a more transparent process for resolving stalled projects.
For homebuyers, the key expectation is that better monitoring, financial accountability and project-level assessments will support more effective efforts towards completing unfinished properties. Source :- India business law Journal
