A recent panel formed by the Insolvency and Bankruptcy Board of India has recommended a significant shift in handling real estate insolvency cases. The panel suggests focusing on completing individual projects rather than resolving entire companies, aiming to deliver faster and more effective outcomes for homebuyers.
Under the current framework of the Insolvency and Bankruptcy Code, insolvency proceedings are conducted at the company level. This often leads to delays and complications, as financially stable projects get affected along with stressed ones. The proposed project-centric approach would treat each real estate project as a separate entity for resolution.
This means only the defaulting or stalled project would undergo insolvency, while other ongoing and viable developments by the same builder can continue without disruption. Such a move is expected to speed up completion timelines and reduce financial stress across projects.
One of the primary goals of this recommendation is to safeguard homebuyers, who are often the most impacted when projects are delayed. The panel has also suggested giving buyers more flexibility, including the option to either take possession of completed units or exit with refunds.
Additionally, the report highlights the importance of better alignment between insolvency laws and real estate regulations for smoother execution. By prioritizing project completion, the proposed changes aim to rebuild trust in the sector.
If implemented, this approach could improve efficiency, reduce delays and bring greater confidence among stakeholders in India’s real estate market.
