IBBI Introduces New Insolvency Rules for Real Estate Projects, Puts Homebuyer Interests First

• Individual real estate projects can be recommended for exclusion from CIRP with at least 66% CoC voting support.
• Homebuyers will receive stronger representation in insolvency monitoring committees.
• Resolution plans must include project-wise construction and possession timelines.

The Insolvency and Bankruptcy Board of India (IBBI) has introduced new rules to improve the resolution of financially distressed real estate companies and protect homebuyers. Notified on 30 October 2026, the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) (Fifth Amendment) Regulations, 2026 were announced through a press release dated 31 October 2026.

The changes introduce a project-wise approach to insolvency proceedings, allowing individual real estate projects to be assessed and handled separately.

The amendment is particularly relevant for developers operating multiple housing projects when only some developments are facing financial or construction-related difficulties. Under the revised framework, a completed or substantially developed project may be considered for exclusion from the Corporate Insolvency Resolution Process (CIRP), while other projects continue through insolvency proceedings.

The new provisions also require separate financial reporting for each project, independent construction-cost assessments and more detailed disclosures about homebuyers, inventory and pending approvals.

According to IBBI, the amendments aim to make real estate insolvency resolutions more transparent, practical and effective. The regulator has emphasised better protection of homebuyers and other stakeholders through improved accountability, project-level financial information and greater participation in the implementation of resolution plans.

Individual Real Estate Projects May Be Excluded from Insolvency Proceedings

One of the most significant changes is the provision allowing individual real estate projects to be considered for exclusion from CIRP.

When a developer has multiple projects under insolvency, the Resolution Professional (RP) must present project-wise information at the first meeting of the Committee of Creditors (CoC). This information will include RERA registration details, construction progress, possession and occupancy status, and details of completed and incomplete units.

Based on this information, the CoC can recommend excluding an individual project from CIRP if it receives at least 66% voting support. The recommendation must include recorded reasons and be submitted to the Adjudicating Authority through an application filed by the RP.

However, the exclusion is not automatic. The final decision rests with the Adjudicating Authority, not the CoC alone.

The provision is intended to prevent completed or occupied projects from being unnecessarily affected by financial difficulties in other developments belonging to the same developer.

Separate Bank Accounts and Financial Reporting for Every Project

The revised regulations also introduce stricter financial monitoring requirements for real estate companies undergoing insolvency.

A separate bank account must be maintained for each real estate project of the corporate debtor. The Resolution Professional must provide project-wise details of receipts, payments and other financial information to the CoC at intervals decided by the committee.

The amendment also requires compliance with fund-utilisation provisions under the Real Estate (Regulation and Development) Act, 2016 (RERA).

This means money collected for a particular project must be used for that project in accordance with applicable RERA requirements. The move is expected to improve financial transparency and make it easier for creditors and stakeholders to monitor how project funds are being utilised.

Independent Assessment of Construction Costs Made Mandatory

Before inviting expressions of interest from potential resolution applicants, the Resolution Professional must arrange an independent technical and cost-to-complete assessment for each real estate project.

The assessment must be conducted by suitably qualified professionals appointed with prior CoC approval. It will examine several important aspects, including:

• Current construction progress and physical condition of the project.
• Regulatory approvals and permissions.
• Sold and unsold residential or commercial inventory.
• Estimated funds required to complete construction.
• Expected completion schedules and potential project risks.

The assessment will become part of the Information Memorandum (IM), which is shared with prospective resolution applicants.

This requirement is expected to help investors and potential developers understand the actual financial and construction requirements before submitting resolution proposals. It may also reduce uncertainty around the cost and time needed to complete stalled housing projects.

Stronger Representation for Homebuyers in Insolvency Proceedings

The amendment gives homebuyers a more structured role in the insolvency resolution process.

Authorised Representatives (ARs) representing a class of creditors, including homebuyers, must now have their profiles and responsibilities shared with the concerned creditors. They must also submit minutes of their meetings with creditors to the Resolution Professional.

These minutes will be placed before the CoC at its next meeting. Additionally, the views, concerns and opinions raised by authorised representatives must be recorded in the CoC meeting minutes.

Another important provision concerns the monitoring committee responsible for implementing an approved resolution plan.

For companies with real estate projects, this committee must include the authorised representative of creditors in a class or another representative of allottees selected through a majority vote. Representatives of the concerned RERA and competent authority must also be included wherever applicable, subject to their agreement.

This arrangement is intended to improve coordination between homebuyers, regulators and resolution applicants during project completion.

Resolution Plans Must Include Project-Wise Possession Timelines

The new regulations require resolution plans for real estate companies to provide much more detailed information about individual developments.

Plans must specify the number of sanctioned, completed and under-construction units, with separate details for sold and unsold inventory.

They must also explain how the claims of homebuyers will be addressed. Possible measures include handing over possession, executing conveyance deeds, registering or transferring property titles, providing refunds or adopting other appropriate solutions.

Importantly, the regulations also require project-wise, phase-wise or tower-wise construction and delivery timelines, wherever applicable.

Resolution applicants must additionally account for homebuyers whose details are available in the corporate debtor’s financial records or RERA records but who have not formally submitted their claims to the Resolution Professional.

Periodic progress reports must be submitted to the monitoring committee to track implementation.

Faster Possession Handover for Eligible Homebuyers

The amendment also introduces flexibility in the approval process for handing over possession of plots, apartments and buildings during CIRP.

Under Regulation 4E, the CoC can approve individual possession requests. Alternatively, it can provide in-principle approval authorising the Resolution Professional to process eligible requests as they are received.

This second option could reduce delays by avoiding the need to obtain a separate CoC approval for every individual possession request.

For homebuyers waiting for possession in projects undergoing insolvency, the provision could offer a more efficient route towards receiving their properties, subject to the applicable requirements and approvals.

What the New IBBI Amendment Means for Homebuyers and Developers

The Fifth Amendment Regulations, 2026 could change how stalled real estate developments are handled during corporate insolvency proceedings.

For homebuyers, the project-wise approach may help prevent delays in completed developments because of financial difficulties in other projects of the same developer. Greater representation in monitoring committees and mandatory possession timelines also provide additional mechanisms to track project progress.

For developers and Resolution Professionals, the framework introduces more detailed responsibilities relating to project accounts, financial disclosures, construction assessments and implementation reporting.

Banks, financial institutions and other creditors may also benefit from improved project-level financial information, helping them assess the viability of individual developments and potential resolution proposals.

What Happens Next?

The implementation of the revised regulations will require Resolution Professionals and CoCs to adopt project-wise financial reporting and documentation practices. Independent technical assessments will also become an important part of the resolution process before expressions of interest are invited.

Homebuyers should keep their allotment letters, payment receipts, builder correspondence and other property-related documents accessible. They should also follow communications from their authorised representatives and monitor developments concerning their respective projects.

It is important to note that the CoC’s recommendation alone does not remove a project from insolvency proceedings. The Adjudicating Authority must approve the exclusion. Similarly, possession handover and project completion will remain subject to the applicable legal, regulatory and implementation requirements.

The amendment marks a significant step towards treating real estate projects individually during insolvency, rather than allowing financial difficulties in one development to automatically complicate the resolution of every project owned by a developer.

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Frequently Asked Questions

1. What are the IBBI Fifth Amendment Regulations, 2026?

These are amendments to the CIRP Regulations that introduce project-wise insolvency resolution, separate financial reporting, independent construction assessments and stronger homebuyer participation for corporate debtors with real estate projects.

2. Can a real estate project be removed from CIRP?

Yes. The CoC can recommend exclusion with at least 66% voting support and recorded reasons. However, the final decision must be taken by the Adjudicating Authority.

3. Will homebuyers get stronger protection under the new rules?

The amendment strengthens homebuyer participation through authorised representatives, monitoring committee membership, improved claim disclosures and project-specific possession timelines.

4. Will homebuyers who have not filed insolvency claims be considered?

The Information Memorandum must include details of allottees whose claims appear in the corporate debtor’s books or RERA records, even if they have not submitted claims. The resolution plan must also provide for their treatment.

5. Can homebuyers receive possession during CIRP?

The CoC can approve possession requests individually or grant in-principle approval allowing the Resolution Professional to process eligible requests as they arise under Regulation 4E.

6. When were the new IBBI regulations notified?

The Fifth Amendment Regulations, 2026 were notified on 30 October 2026 and announced through IBBI Press Release No. IBBI/PR/2026/18 dated 31 October 2026. The press release does not specify a separate commencement date.