The insolvency framework in India has undergone many changes from time to time with the aim of developing an effective resolution mechanism for debt-ridden entities.

Nearly a decade in existence, the framework continues to be a work in progress, with each amendment aimed at addressing the practical issues for an effective implementation and improve resolution of corporate debtors as well as address the interests of the stakeholders involved. Aligned with this intent, the Insolvency and Bankruptcy Board of India (“IBBI”) had released a Discussion Paper dated 7th November 2024[1] (“Discussion Paper”) shedding light on the practical challenges, issues and concerns surrounding the insolvency of real estate companies.

Following the Discussion Paper, the IBBI has notified the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) (Amendment) Regulations, 2025 (“Amendment Regulations”)[2]. The Amendment Regulations have introduced significant changes to the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 (“CIRP Regulations”) which focus on resolving the practical lacunae, protecting allottees’ interests and improving transparency of insolvency process of real estate companies. In this article, we have highlighted the key changes in the CIRP Regulations, their practical repercussions for the stakeholders, as well as possible recommendations for the players involved.

The Before and After:

To put it succinctly, the Amendment Regulations have inter alia made the following key changes to the CIRP Regulations:

  • Handing over possession of flats during insolvency[3]

Where an allottee has fulfilled its contractual obligations under the relevant agreement with the corporate debtor, such allottees are now entitled to request the resolution professional (“RP”) for handover of possession of the flat as well as seek its registration, provided the committee of creditors (“CoC”) with at least 66% voting share approves such request.

Given the CIRP Regulations were silent on the rights of allottees in such a scenario prior to the amendment, this insertion provides much needed clarity on the rights of allottees, who were previously left at the mercy of exercise of the inherent powers of the courts / tribunals on a case-to-case basis. This amendment will go a long way in protecting the interests of allottees and eliminate uncertainty regarding the procedure to be followed for the handover of possession and registration of flats to allottees thereby reducing the burden on allottees and courts / tribunals.

  • Effective Representation of sub-classes through facilitators[4]

The Amendment Regulations seek to bridge the gap in communication by providing for ‘facilitators’ in cases where there are more than 1,000 creditors in a sub-class within a class, provided it is requested by a minimum of 100 creditors after the first CoC meeting.
A maximum of 5 (five) facilitators can be appointed whose fees would form part of the
CIRP cost. Earlier, such class of creditors were represented through one authorized representative in the CoC meetings which often led to potential roadblocks in communication.

By including a facilitator and defining their roles and responsibilities, the Amendment Regulations aim to improve communication and representation between the authorised representative and the creditors, ensuring that the voices of individual creditors are better heard.

  • Inclusion of Competent Authorities in CoC Meetings[5]

Given the substantial involvement of government authorities during allocation of land for development to real estate companies, there was a pressing need to include their perspective to aid and assist the decision-making process of the CoC in insolvency of real estate companies. The Amendment Regulations allow the RP to invite competent authorities to CoC meetings, if directed by the CoC, albeit without any voting rights. The competent authorities may provide their inputs on matters related to the development of real estate projects of the corporate debtor.

Further, the RP is now required to submit a report on the status of development rights and permissions for real estate projects to the CoC for its comments and thereafter to the Adjudicating Authority within 60 (sixty) days of insolvency commencement. This will not only refine the assessment of the corporate debtor’s assets but will also help in preparing the Information Memorandum to reflect the actual status of real estate projects, approvals, permits etc. Overall, it will assist the CoC in making informed decisions during the insolvency process.

  • Facilitating participation of Association of Allottees as resolution applicants

While association of allottees were allowed to act as resolution applicants, the Amendment Regulations now aim to relax certain requirements at the behest of the CoC. These relaxations extend to the eligibility criteria for submission of Expression of Interest, conditions regarding refundable deposit and submission of performance security. However, these relaxations can only be extended to an association of allottees which represents at least 10% or 100 creditors in a class, whichever is lower.

This will remove the financial hurdle for association of allottees to arrange for high value deposits and encourage their active participation in the resolution process.

  • Monitoring Committee for orderly implementation

The Amendment Regulations have further expanded the provisions related to a Monitoring Committee making it mandatory for the CoC to consider setting up a Monitoring Committee for supervising the implementation of the resolution plan and require the Monitoring Committee to submit quarterly reports to the Adjudicating Authority on the progress.

An amendment on paper or an actual game changer for allottees?

An overview of the Amendment Regulations certainly reflects a step forward in securing the allottees’ interests and strengthening their participation in the rehabilitation of insolvent real estate companies. On the flip side, it cannot be overlooked that the amendments related to handing over of possession, inclusion of competent authorities in CoC meetings, relaxation for association of allottees participating as resolution applicants etc. are broadly CoC driven and not absolute in nature. Resultantly, these provisions increase the role of the CoC in making decisions which directly deal with the interests of allottees as well as the effective revival of the corporate debtor. Further, the discretion bestowed with the CoC to relax conditions for the association of allottees acting as resolution applicants will indeed contribute towards deciding the general quality of resolution applicants participating in the process; however, the type and extent of relaxations permitted by the CoC would only be tested with time.

Additionally, while the preparation of reports on the status of development rights and permissions along with inputs received from the CoC would bring in more clarity to the stakeholders, the Amendment Regulations are silent on whether such reports can be made available to resolution applicants for their independent assessment. If such access is provided, it would undoubtedly benefit resolution applicants and place them on a better footing while preparing resolution plans.

Be that as it may, the Amendment Regulations only set out a procedural framework whose efficacy is entirely dependent on the discretion of the CoC which will be at liberty to decide not to adopt the same without much consequence. Albeit a promising start, basis implementation of the Amendment Regulations on the ground level, further amendments may have to be introduced to balance the rights and powers of the CoC against the rights of allottees within the existing framework.

Authors: 

Madhura Kulkarn, Senior Associate, Juris Corp
Email: [email protected]

Aditi Sinha, Senior Associate, Juris Corp
Email: [email protected]

Viidhi Chopra, Senior Associate, Juris Corp
Email: [email protected] 

[1] https://ibbi.gov.in/uploads/whatsnew/c7ddc802e5b2c4f073fa0d419813844a.pdf813844a.pdf

[2] Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) (Amendment) Regulations, 2025 dated 3rd February 2025 (F.No. IBBI/2024-25/GN/REG122)

[3] Regulation 4E of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) (Amendment) Regulations, 2025.

[4] Regulation 16C and 16D of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) (Amendment) Regulations, 2025.

[5]  Regulation 18(4) and 30(C) of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) (Amendment) Regulations, 2025.

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