IBBI Discussion Paper Proposes 13 Reforms to Real Estate Insolvency, 2026

Background and Context

Real estate occupies a distinct place within India's insolvency framework. Unlike most corporate insolvencies, where the goal is value maximisation for creditors, real estate cases involve a large body of homebuyers whose primary interest is delivery of the flat or unit they paid for — not a financial payout. Treating an entire real estate company as a single insolvency unit, irrespective of how many of its individual projects are complete, occupied, or stalled, has repeatedly created friction between the objectives of the Insolvency and Bankruptcy Code, 2016 (Code) and the lived reality of homebuyers waiting for possession.

This tension came to a head in the Supreme Court's judgment dated 12th September 2025 in Mansi Brar Fernandes v. Shubha Sharma & Ors., where the Court directed IBBI, working with Real Estate Regulatory Authorities (RERAs), to frame sector-specific guidelines for real estate insolvency — including project-wise timelines and stronger safeguards for allottees. IBBI responded by constituting the Committee on Framing Guidelines for Insolvency Proceedings in the Real Estate Sector, which submitted its report on 7th April 2026.

Based on the Committee's recommendations, this Discussion Paper sets out 13 proposals to amend the CIRP Regulations, 2016 and to issue a supporting Circular, guided by four stated objectives: prioritising project completion over liquidation, ensuring transparency for homebuyers, strengthening accountability of insolvency professionals, and enabling viable resolution of real estate projects. The common thread running through all 13 is a shift away from treating the corporate debtor as one undivided insolvency estate, toward treating each real estate project as its own economic unit — prioritising completion over liquidation, ring-fencing project-level funds, and giving allottees a more structured voice in the process.

Proposal 1 — Identification and Exclusion of Real Estate Projects from CIRP

Where a corporate debtor (CD) runs multiple real estate projects, the current law brings every project into CIRP together, regardless of individual status. This can drag completed or fully occupied projects into a process they don't need, disrupting allottees who already have — or are about to get — possession.

How it would work (new Regulation 18B): At its first meeting, the RP must present the CoC with a project-wise breakdown covering RERA registration details, stage of completion, occupancy and possession status, and the number of completed and incomplete units, for every project of the CD. The CoC then classifies projects (occupied, completed, substantially completed, ongoing, etc.) and can identify ones that don't need insolvency intervention.

Proposal 2 — Strengthening Project-Wise Ring-Fencing of Funds

Existing Regulation 4D already requires a separate bank account per real estate project, but there's no comprehensive framework for project-wise accounting. Stakeholders have flagged difficulty tracking project-specific cash flows, receivables and expenditures — eroding homebuyer confidence in how funds are used.

Proposal 3 — Handing Over Possession of Units to Allottees

Existing Regulation 4E (inserted 3rd February 2025) already lets RPs hand over possession after 66% CoC approval. But requiring fresh approval for every individual unit — even ones already complete and where the allottee has fulfilled all obligations — has caused delays. The Supreme Court in Mansi Brar Fernandes specifically directed IBBI to build a mechanism enabling handover where substantial units are complete.

Proposal 4 — Simplified Claim Form for Real Estate Allottees (Form CA-R)

Financial creditors in a class currently file claims via the generic Form CA — built around institutional creditors, not individual homebuyers. Real estate CIRPs often involve hundreds or thousands of allottees with limited familiarity with insolvency procedure, leading to errors and incomplete filings.

A new allottee-specific Form CA-R is proposed (to be notified via Circular), with seven parts: Particulars of Allottee, Project & Unit Details, Financial Details, Preference of Relief (possession / conveyance / refund / other), Possession Status, Supporting Documents, and a Declaration.

Proposal 5 — Identification and Disclosure of Allottee Preferences

Allottees vote as a single class in the CoC, but their underlying expectations differ — some want possession, others a refund or conveyance. Currently there's no systematic way to capture or disclose this, leaving resolution applicants and the AA with limited visibility when structuring or approving plans.

Proposal 6 — Mandatory Disclosures in the Information Memorandum

Disclosure quality in real estate IMs varies widely today — incomplete inventory, approval status or construction data makes it hard for resolution applicants to price risk and submit viable bids.

A new clause (hb) under Regulation 36(2) would mandate project-wise disclosure of: total sanctioned units split into completed/under-construction, sold/unsold inventory, percentage construction completion (including common areas/amenities), and the status of every statutory approval — obtained, pending, expired, or due for renewal.

Proposal 7 — Independent Technical and Cost-to-Complete Assessment

Resolution plans for real estate projects live or die on accurate cost-and-timeline estimates. Without a credible, independent baseline, applicants and creditors evaluate competing bids on shaky ground.

Proposal 8 — Mandatory Contents of Resolution Plans

Resolution plans for real estate projects often lack clarity on allottee treatment, completion timelines, and what "implementation" actually means — fuelling post-approval disputes.

Regulation 38A is proposed to be substituted to require every real estate resolution plan to specify: unit-wise breakup (sanctioned/constructed/sold/unsold), allottee treatment (possession, conveyance, refund, or other relief), treatment of allottees who never filed claims, project/phase/tower-wise delivery timelines, consequences of allottee default, and periodic progress reporting to the Monitoring Committee.

Proposal 9 — Enhanced Monitoring Committee Composition

Implementing a real estate resolution plan stretches over years — construction, approvals, possession handovers, conveyance. Without homebuyers or regulators on the Monitoring Committee, issues surface late and litigation increases.

Proposal 10 — Transparency in Functioning of Authorised Representatives

Allottees interact with the CoC only through their Authorised Representative (AR) — but AR consultations with creditors aren't currently recorded, and creditors choose their AR at public-announcement stage with little information about that AR's profile.

Three changes are proposed: public announcements would link to each proposed AR's professional profile and a plain explainer of the AR's role; a new Regulation 16B would require ARs to submit minutes of their meetings with creditors to the RP for placement before the CoC; and a new Regulation 24(6A) would require CoC minutes to record the AR's views, concerns and opinions on matters discussed.

Proposal 11 — Additional Safeguards Prior to Liquidation

A new Regulation 39D would require the RP, before proposing liquidation, to place a detailed note before the CoC covering: efforts made to find completion-oriented solutions, whether any proposals were received from developers/allottees/investors, and why those alternatives weren't feasible. CoC minutes must record that alternatives were considered, and the note must be annexed to any liquidation application filed before the AA.

Proposal 12 — Coordination Between RPs and RERA Authorities

RPs often struggle to get complete, reliable project data because much of it — registrations, sanctioned plans, escrow account status — sits with RERA, not the CD. A proposed Circular would formalise three things:

• Information sharing: the IRP/RP may seek registration details, sanctioned plans, allottee records, escrow account status and approval/compliance status directly from the relevant RERA, and rely on these where the CD's own records are incomplete or inconsistent.
• Continued RERA compliance during CIRP: commencement of CIRP does not exempt the CD from RERA obligations — the RP must keep complying.
• Plan-feasibility consultation: beyond the existing (non-voting) right under Regulation 18(4) to invite RERA to CoC meetings, the RP may now invite RERA's written views on a resolution plan's regulatory feasibility, to be placed before the CoC and prospective applicants.

Proposal 13 — Prominent Disclosure of CIRP at Project and Office Sites

Many allottees, contractors and suppliers simply don't know a developer has entered CIRP — newspaper or website notices don't always reach dispersed homebuyers, leading to delayed claims and continued dealings with the former management.

A new clause (bc) under Regulation 6(2) would require conspicuous signboards at every project site and notice boards at the registered office, corporate office, site office, sales office and any other accessible office — stating that the CD is undergoing CIRP and naming the RP with contact details.

Key Changes at a Glance

Compliance Checklist

CorpLawUpdates Analysis

The most consequential proposal here isn't any single regulation — it's the conceptual reframe running through all 13: treating each real estate project as its own insolvency unit rather than bundling everything under the corporate debtor. Proposal 1's project-exclusion mechanism and Proposal 8's project-wise resolution plan contents both flow from this, and together they could meaningfully reduce the number of completed, occupied projects that get needlessly dragged through CIRP — a recurring homebuyer grievance long before this paper.

The practical compliance load, though, falls heavily on RPs. Project-wise books of accounts (Reg 4DA), independent cost-to-complete assessments before the EOI stage (Reg 4F), and the new pre-liquidation note (Reg 39D) all add documentation and cost to an already resource-intensive process — particularly for CDs running several mid-sized projects simultaneously. RPs in active real estate mandates would do well to start building these workflows now rather than waiting for formal notification, since the underlying data requirements (RERA registration status, sold/unsold inventory, completion percentages) don't change whether or not the regulation is yet in force.

Form CA-R and the project-wise IM disclosures (Reg 36(2)(hb) and (jb)) are likely to be the most immediately useful changes for practitioners on the ground — both address a genuine, longstanding pain point of poor-quality, inconsistent allottee data that has slowed claim verification and plan formulation in nearly every large real estate CIRP. The two alternatives proposed for possession handover under Regulation 4E are also worth watching closely: Alternative 1's "complete on ICD" trigger is narrower but cleaner to administer, while Alternative 2's blanket in-principle approval gives CoCs more flexibility but less granular oversight — IBBI's choice between the two (or a hybrid) will shape how quickly homebuyers actually get keys.

Given that this is still a discussion paper and not a notified amendment, practitioners should treat the 13 proposals as a strong directional signal rather than settled law. CS and CA professionals advising developers, RPs, or homebuyer associations have a real opportunity here — the comment window closes 21st July 2026, and proposal-specific feedback (particularly on the Form CA-R structure and the choice between the two possession-handover alternatives) is likely to carry weight given the Committee's direct stakeholder consultation process.