IBBI lets stalled housing projects be pulled out of developer insolvency cases

On 30 October 2026, 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. In a press release dated 31 October 2026 (No. IBBI/PR/2026/18), the regulator said the changes seek to promote viable resolution of real estate projects. The amendment allows a single project of an insolvent developer to be recommended for exclusion from the corporate insolvency resolution process (CIRP), instead of the whole company being held under one process.

What changes for stalled projects

When a developer is admitted into CIRP, a moratorium applies. This is a legal freeze that stops most recovery actions against the company and its assets. The new rules let the committee of creditors (CoC), which is made up of lenders and other creditors, recommend excluding an individual project from CIRP if it gets at least 66% voting support. The exclusion is not automatic. The Adjudicating Authority, which is the National Company Law Tribunal for companies, must decide it.

Before inviting bids for a project, the resolution professional (RP), with the CoC's prior approval, must appoint independent professionals to assess its technical status and the cost of completing it. The assessment must cover construction status, pending statutory approvals, funding needs and the risks of completion. The amendment keeps the requirement, first introduced in February 2024, that each real estate project have its own bank account. The RP must also place project-wise statements of receipts and payments before the CoC, while complying with RERA fund-utilisation rules. RERA is the Real Estate (Regulation and Development) Act, 2016.

The Information Memorandum must now give project-wise detail on sanctioned, completed and under-construction units, inventory, construction progress, approvals, encumbrances, lender-wise charges, pending litigation, regulatory proceedings, penalties, complaints and balances in designated RERA accounts. Confidentiality rules have also been extended to valuation reports. The regulator's framing is that these steps reduce the information gap between developers, lenders and buyers.

Homebuyer representation and possession

Where creditors are grouped in a class, homebuyers must be offered a choice of three insolvency professionals identified under Regulation 4A to act as their authorised representatives (ARs). The ARs must send their meeting minutes with creditors to the RP, who places them before the CoC. The monitoring committee must include the AR of a creditor class or another allottee representative chosen by majority vote. Representatives of the concerned RERA authority and competent authority are also included where applicable, if they agree.

During CIRP, the CoC can approve possession requests one by one, or give an in-principle approval that lets the RP process such requests as they arrive. Resolution plans must state how allottee claims will be met, through possession, conveyance deeds, registration or title transfer, or refunds. Plans must also set project-wise, phase-wise or tower-wise timelines for completion and possession where applicable. Buyers whose claims are not yet filed but are listed in the Information Memorandum are also covered.

The committee report behind the change put the scale of the problem at 221 ongoing real estate insolvency cases, involving about 1,08,887 homebuyers, as of 30 September 2025.

When it applies and what comes next

The regulations took effect on publication in the Official Gazette. The press release does not set a separate start date. Cases admitted before 30 October 2026 may not automatically fall under the new framework, and courts are expected to settle how far it applies to them. Each proposed project exclusion will need the Adjudicating Authority's approval, and monitoring committees will receive periodic progress reports.

• Homebuyers in a developer's insolvency case should ask the RP or their AR for project-wise figures, including the balance in the project's RERA bank account.
• Buyers should note that RERA complaints remain open. An IBBI circular requires the IRP or RP to comply with the applicable RERA provisions.
• Developers in CIRP must keep separate project bank accounts and be ready for independent project assessments before bids open.
• Creditors and resolution professionals should track the first exclusion applications to the Adjudicating Authority, since those decisions will show how the rules work in practice.