In a significant move that promises to revolutionize the landscape of real estate insolvency proceedings, the Insolvency and Bankruptcy Board of India (IBBI) has introduced groundbreaking amendments to its regulatory framework. These changes, effective from February 3, 2025, particularly focus on addressing the long-standing concerns of distressed homebuyers caught in stalled real estate projects.

Key Amendments and Their Impact

The most notable change in the amended regulations is the empowerment of resolution professionals to facilitate early possession of properties to homebuyers. This can now be done during the ongoing resolution process, subject to approval from the Committee of Creditors (CoC) and fulfillment of necessary obligations. For homebuyers who have invested their life savings in real estate projects, this amendment brings much-needed relief from the typically prolonged wait times associated with insolvency resolutions.

• Another significant introduction is the concept of facilitators for large creditor classes, particularly homebuyers.
• These facilitators will serve as crucial intermediaries between authorized representatives and creditors, ensuring effective communication and transparency throughout the insolvency proceedings.
• This measure addresses a critical gap in the previous framework where homebuyers often struggled to actively participate in and understand the resolution process.

Enhanced Stakeholder Participation

The amendments also bring a strategic improvement in stakeholder engagement by allowing the Committee of Creditors to invite land authorities such as NOIDA and HUDA to their meetings. This inclusion is particularly valuable as these authorities can provide essential insights on regulatory requirements and land development matters. Their participation is expected to strengthen the viability of resolution plans and boost stakeholder confidence in the process.

Legal Framework and Implementation

These amendments are being implemented through various regulatory instruments, including:

• The IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2016
• The recent IBBI (Insolvency Resolution Process for Corporate Persons) (Amendment) Regulations, 2025
• Supporting circulars and notifications issued under the Insolvency and Bankruptcy Code, 2016

Looking Ahead

These amendments mark a pivotal shift in India’s insolvency framework, particularly for the real estate sector. The enhanced role of facilitators, combined with the possibility of early possession for homebuyers, creates a more robust and practical approach to resolving distressed real estate projects. As these changes take effect, we anticipate seeing faster resolutions, improved stakeholder satisfaction, and greater confidence in the real estate sector’s insolvency framework.