IBBI Amends Insolvency Rules to Ring-Fence Stalled Real Estate Projects for Homebuyers

What the regulator changed

The Insolvency and Bankruptcy Board of India (IBBI) notified the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) (Fifth Amendment) Regulations, 2026 on 30 October 2026. The regulations came into force on the date of their publication in the Official Gazette. The board announced the change in a press release dated 31 October 2026.

The main change is that a single project can now be recommended for exclusion from the corporate insolvency resolution process (CIRP). Until now, admission of a developer into CIRP triggered a blanket moratorium over all of its projects. The amendments allow the Committee of Creditors (CoC) to recommend that an individual project be taken out of the process if at least 66% of its members support it.

The exclusion is not automatic. The final decision rests with the Adjudicating Authority.

Why the regulator acted

A committee led by Jayanti Prasad submitted its report in April 2026, with 155 recommendations covering 55 issues. The amendments draw on that work.

The scale of the problem is large. Per the committee report cited by reporters, India had 221 ongoing real estate insolvency cases involving approximately 1,08,887 homebuyers as of 30 September 2025. Under the existing framework, a blanket moratorium can hold up completed or nearly completed towers because of financial trouble elsewhere in the same developer's portfolio.

An official named Rawat was quoted saying that project-wise insolvency would confine the moratorium and CIRP to defaulting projects.

Protections for homebuyers under the rules

• Independent assessment: Before inviting expressions of interest from prospective resolution applicants, the resolution professional (RP), with prior CoC approval, must appoint independent professionals to assess the technical status and cost of completing each project. The assessment must cover construction status, pending statutory approvals, funding needs and completion risks.
• Disclosure: The Information Memorandum must set out project-wise details of sanctioned, completed and under-construction units, inventory, construction progress, statutory approvals, encumbrances, lender-wise charges, pending litigation, regulatory proceedings, penalties and complaints, and balances in designated RERA bank accounts.
• Representation: Creditors in a class, including homebuyers, can choose from three insolvency professionals identified under Regulation 4A to act as their authorised representative. Monitoring committees for companies with real estate projects must include the authorised representative or another allottee representative chosen by majority vote, and RERA and competent authority representatives where applicable and willing.
• Possession during CIRP: The CoC can approve possession requests case by case, or give an in-principle approval that lets the RP process requests as they arrive.
• Resolution plan terms: Plans must state how allottee claims will be met, through possession, conveyance deeds, registration or transfer of title, refunds or other appropriate means. They must also set project-wise, phase-wise or tower-wise completion and possession timelines where applicable.
• Unfiled claims: The rules also cover homebuyers whose claims have not been formally filed but are listed in the Information Memorandum.

Lenders, investors and the market

Banks, financial institutions and other creditors may gain from better project-level financial information, which helps them judge whether individual developments are viable and whether a resolution proposal makes sense. The RP must place project-wise statements of receipts and payments before the CoC at intervals the CoC considers appropriate, while complying with RERA fund-utilisation requirements. Minutes of the authorised representative's meetings with creditors must also go to the CoC.

Confidentiality requirements now extend to valuation reports, in addition to fair value and liquidation value.

For bidders, the value of a project-specific approach depends on how quickly RPs can prepare project plans and find viable buyers for stalled sites. Legal commentary expects courts to settle how far the changes reach.

Open questions and what comes next

• Tribunal decisions: Each proposed project exclusion needs an Adjudicating Authority order before it takes effect.
• Cases admitted earlier: The regulations take immediate effect, which usually means prospective application. Cases admitted before 30 October 2026 may not automatically fall under the new framework, and courts are expected to settle this.
• Monitoring: Periodic progress reports must go to the monitoring committee so that implementation can be tracked.
• Related rules: An IBBI circular requires insolvency professionals to ensure compliance with applicable RERA provisions and to display CIRP notices at project sites. The circular applies to corporate debtors with one or more real estate projects in CIRP.