# IBBI lets creditors keep completed housing projects out of a builder's insolvency process

URL: https://upsc.help/current-affairs/2026-11-01/ibbi-real-estate-project-wise-cirp/
Date: 1 November 2026 (2026-11-01)
Source: Indian Express, Page 17
UPSC papers: GS3, GS2
Publisher: upsc.help (Pratidin), free and open-source UPSC Civil Services current affairs. Not affiliated with UPSC. Every fact was checked against the source reports by a separate review before publishing.

**In one line:** IBBI's regulations of 30 October 2026 let creditors recommend excluding viable or completed projects from a developer's insolvency, and ring-fence each project's money and information.

The Insolvency and Bankruptcy Board of India (IBBI) notified the Insolvency Resolution Process for Corporate Persons (Fifth Amendment) Regulations, 2026 on 30 October 2026, effective from their publication in the Official Gazette. They change how the corporate insolvency resolution process (CIRP) works when the debtor is a real estate developer. The core change is project-wise treatment. Where a developer has more than one project, the resolution professional (RP) must place each project's details before the committee of creditors (CoC) at its first meeting: RERA registration, stage of completion, possession and occupancy status, and completed and incomplete units. The CoC may then, with at least 66% of the voting share and recorded reasons, recommend that a project be excluded from the CIRP. The RP applies to the Adjudicating Authority, the National Company Law Tribunal (NCLT), which decides.

Other changes strengthen homebuyers' hand. The RP must keep a separate bank account for each project (a requirement since February 2024), report project-wise receipts and payments to the CoC, and follow the fund-use rules of the Real Estate (Regulation and Development) Act, 2016 (RERA). Before inviting resolution applicants, the RP must, with CoC approval, appoint independent professionals for a project-wise technical and cost-to-complete assessment covering construction progress, approvals, inventory, completion cost, funding needs, timelines and risks; it goes into the information memorandum given to bidders. Homebuyers get a choice of three insolvency professionals as their authorised representative, and the monitoring committee that oversees a resolution plan must include an allottee representative and, if they agree, a RERA representative. Resolution plans must state how allottees' claims (possession, conveyance or refund) will be treated and set project, phase or tower-wise timelines.

The background is a long-running problem. Since a 2018 amendment, homebuyers have been treated as financial creditors under the Insolvency and Bankruptcy Code, 2016 (IBC), but when a developer's whole company enters insolvency, every project, including nearly finished ones, is frozen. Business Standard reported that an IBBI discussion paper in June 2026 said homebuyers mainly want "completion and delivery of homes rather than financial recovery", and that a committee report found 221 of 553 admitted real estate cases still ongoing as of 30 September 2025, involving about 1,08,887 homebuyers. The new rules aim at viable, project-level resolution. Their success will depend on how readily NCLT benches accept exclusion requests and how quickly assessments are done.

## Prelims facts

- IBBI notified the CIRP (Fifth Amendment) Regulations, 2026 on 30 October 2026 for real estate insolvency.
- The committee of creditors can recommend excluding an individual real estate project from CIRP with at least 66% of the voting share; the NCLT decides.
- The resolution professional must keep a separate bank account for each project and follow RERA fund-use rules.
- A project-wise technical and cost-to-complete assessment must be done before resolution applicants are invited and included in the information memorandum.
- Monitoring committees for real estate debtors must include an allottee representative and, with consent, a RERA representative.

## Quick recall

- **When did IBBI notify the CIRP (Fifth Amendment) Regulations, 2026?** 30 October 2026.
- **What vote does the CoC need to recommend excluding a real estate project?** At least 66% of the voting share, with reasons recorded.
- **Who decides on a recommendation to exclude a project from CIRP?** The Adjudicating Authority, that is, the NCLT.
- **What must the RP maintain for each real estate project?** A separate bank account, with project-wise statements of receipts and payments.
- **What assessment must precede the invitation to resolution applicants?** A project-wise technical and cost-to-complete assessment by independent professionals.
- **How many insolvency professionals must homebuyers be offered as authorised representative?** A choice of three.
- **Which amendment made homebuyers financial creditors under the IBC?** The 2018 amendment to the IBC.
- **Which judgment upheld homebuyers' status as financial creditors?** Pioneer Urban Land and Infrastructure Ltd v. Union of India (2019).

## Prelims practice question

Under the IBBI's Fifth Amendment Regulations, 2026, what minimum share of votes in the committee of creditors is needed to recommend excluding a real estate project from the corporate insolvency resolution process?

(a) 51%
(b) 60%
(c) 66%
(d) 75%

Answer: (c) 66%. The regulations require not less than 66% of the voting share, with reasons recorded. The resolution professional then applies to the Adjudicating Authority (NCLT), which decides. 66% is also the threshold for approving a resolution plan under Section 30(4) of the IBC.

## UPSC previous-year questions this connects to

- UPSC Prelims 2017, Prelims: Which of the following statements best describes the term ‘Scheme for Sustainable Structuring of Stressed Assets (S4A)’, recently seen in the news?
(a) It is a procedure for considering ecological costs of developmental schemes formulated by the Government.
(b) It is a scheme of RBI for reworking the financial structure of big corporate entities facing genuine difficulties.
(c) It is a disinvestment plan of the Government regarding Central Public Sector Undertakings.
(d) It is an important provision in 'The Insolvency and Bankruptcy Code' recently implemented by the Government. (https://upsc.help/pyq/prelims/#q358)
- UPSC Mains 2016, GS2: What is the quasi-judicial body? Explain with the help of concrete examples. (https://upsc.help/pyq/gs2/#q359)
  How to use this story in the answer: Use the NCLT's role in real estate insolvency as a concrete example of a quasi-judicial body applying law to disputes.

## Mains practice question

Treating a real estate developer's insolvency as one undivided case has hurt homebuyers. Examine how the IBBI's 2026 project-wise reforms address this, and what challenges remain. (250 words)

### Model answer

On 30 October 2026 the IBBI notified the CIRP (Fifth Amendment) Regulations, 2026, moving real estate insolvency from company-wide to project-wise resolution.

## The problem
- Homebuyers have been financial creditors since the 2018 IBC amendment, upheld in Pioneer Urban Land (2019).
- Yet one developer's default froze all its projects, including near-complete ones.
- A committee report found 221 of 553 admitted real estate cases ongoing as of 30 September 2025, involving about 1,08,887 homebuyers.

## What the 2026 regulations do
- **Project exclusion:** CoC can recommend excluding a project with at least 66% of the voting share; NCLT decides.
- **Ring-fenced money:** project-wise receipts and payments statements to the CoC; RERA fund-use rules apply.
- **Better information:** independent technical and cost-to-complete assessment of each project, placed in the information memorandum.
- **Homebuyer voice:** choice of three authorised representatives; allottee and RERA representatives on the monitoring committee.
- **Delivery focus:** resolution plans must state treatment of allottee claims and tower-wise timelines.

## Significance
- Aligns insolvency with homebuyers' main aim: completion and delivery rather than recovery.
- Lets viable projects attract bidders separately.
- Improves RERA and IBC coordination.

## Challenges
- NCLT delays and backlog may slow exclusion decisions.
- Lenders with security over land may resist exclusion.
- Assessments add cost and time to CIRP.
- Fragmented approvals from land authorities remain.

## Way forward
- Time limits for NCLT decisions on exclusion; stronger RERA monitoring; stressed-asset funds for last-mile completion.

Project-wise resolution is a sensible shift, but its value depends on speed at the NCLT.

## The basics

## Why this matters
The Insolvency and Bankruptcy Code, 2016 changed how Indian lenders recover money from failing firms. Real estate exposed its limits: a builder's failure can leave thousands of families without the homes they paid for. The IBBI's October 2026 regulations try to fix this by treating each housing project separately. For the exam, you need the basic machinery of the IBC, the role of homebuyers, and the link with RERA.

## The IBC in brief
When a company defaults, a creditor can apply to the National Company Law Tribunal. If the case is admitted, the company's board is suspended and a resolution professional runs it. Financial creditors form the Committee of creditors, which approves or rejects bids to rescue the company. If no plan is approved, the company is liquidated.

## Where homebuyers fit
A 2018 amendment made Homebuyers as financial creditors, so they sit on the committee of creditors through an authorised representative. This gave them votes, but also exposed a mismatch: banks want recovery, buyers want flats.

## RERA and IBC, side by side
The Real Estate (Regulation and Development) Act, 2016 already requires each project to be registered and most buyer money to be kept in a separate account. The 2026 regulations import this ring-fencing into insolvency, and bring RERA representatives into the monitoring committee. The Insolvency and Bankruptcy Board of India wrote these rules as the regulator of the insolvency process.

## Sources

- https://www.livelawbiz.com/amp/ibbi/insolvency-and-bankruptcy-board-of-india-amendments-cirp-regulations-provide-project-wise-resolution-real-estate-companies-556765
- https://www.business-standard.com/amp/industry/news/ibbi-amends-real-estate-insolvency-rules-to-protect-homebuyers-interests-126103101363_1.html
- https://taxguru.in/corporate-law/ibbi-cirp-amendment-regulations-2026-key-real-estate-projects.html
- https://superkalam.com/current-affairs/01-11-2026/ibbi-rules-seek-to-keep-completed-projects-out-of-resolution-process-pg17-7765cad8-b747-4a86-8ee5-19c918866743