A committee set up by the Insolvency and Bankruptcy Board of India (IBBI) has proposed a major shift in handling real estate insolvency cases by adopting a project-centric resolution approach instead of the current company-wide process.
Under the recommendation, insolvency proceedings would be limited to specific stressed projects, allowing other viable or completed projects of the same developer to continue operations without disruption. This move is aimed at improving efficiency and ensuring faster resolution of troubled projects while protecting the interests of homebuyers and creditors.
The panel emphasized that each real estate project should be treated as an independent economic unit, with separate financial tracking, monitoring, and resolution mechanisms. This approach is expected to reduce delays, prevent value erosion, and avoid unnecessary impact on financially stable projects within the same company.
Industry experts believe the proposal could address long-standing issues in the sector, where insolvency of an entire company often stalls multiple projects, affecting thousands of homebuyers.
If implemented, the framework could significantly improve completion timelines, enhance investor confidence, and bring greater clarity to real estate insolvency proceedings in India.
