From Courtroom to Construction Site: IBBI's New Report Targets Stalled Homes
Author: Editorial Desk
Introduction:
Nearly a decade after the Insolvency and Bankruptcy Code (IBC) came into force, the insolvency framework for India’s real estate sector may be on the cusp of a significant overhaul. The Insolvency and Bankruptcy Board of India (IBBI) has received the report of a committee it constituted to frame sector-specific guidelines for insolvency proceedings in real estate, a move that could bring long-awaited relief to hundreds of thousands of homebuyers stuck in stalled projects across the country.
The Background
The committee was not constituted on IBBI’s own initiative. It took a Supreme Court direction to set the wheels in motion. On 12th September 2025, the Supreme Court of India, in Mansi Brar Fernandes v. Shubha Sharma & Ors., issued pointed directions to the IBBI to constitute a council to frame sector-specific guidelines for real estate insolvency. The Court recognised that real estate constitutes one of the largest categories of cases under the IBC, and that the existing framework, designed primarily for commercial and industrial entities, was inadequately equipped to address the unique complexities of real estate insolvency.
In response, the IBBI constituted an eight-member committee chaired by Mr. Jayanti Prasad, Whole Time Member, IBBI. The committee also included representatives from the Ministry of Housing and Urban Affairs, the Ministry of Corporate Affairs, RERA authorities from Haryana and Uttar Pradesh, and the All India Forum of Real Estate Regulatory Authorities. The report was submitted to IBBI Chairperson Shri Ravi Mital on 7th April 2026.
Why Real Estate Insolvency is Different
The report opens with a recognition that is at the heart of the entire exercise, real estate insolvency is fundamentally different from insolvency in any other sector. When a real estate developer goes insolvent, the casualties are largely individual homebuyers, people who have invested their life savings, serviced home loans for years, and are still waiting for possession of homes they were promised.
The IBC’s 2018 amendment recognised homebuyers as financial creditors, which was a significant step. But classification alone has not translated into timely resolution. Insolvency proceedings in real estate have been marked by prolonged timelines, frozen (separate project) bank accounts, fragmented project structures, and a near-total disconnect between the IBC process and the RERA framework that governs real estate regulation. The result has been value erosion rather than value preservation, leaving homebuyers in a state of prolonged uncertainty.
The Scale of the Problem
The human cost of real estate insolvency in India is staggering. The report estimates that cases currently in, or having passed through, insolvency proceedings touch nearly two and a half lakh homebuyers. Factor in families, and you are looking at close to a million people living with the uncertainty of not knowing when, or whether, they will ever get the home they paid for. For most of them, this is not a legal dispute. It is years of paying rent and EMIs simultaneously, with no possession in sight and dwindling faith in the system.
What the Committee Has Recommended
The committee has identified 55 critical issues and made 155 specific recommendations. Among the most significant are the proposal for project-wise admission of insolvency proceedings, so that a solvent project is not dragged into insolvency merely because another project of the same developer is under the Corporate Insolvency Resolution Process (CIRP). The report also recommends excluding completed or substantially occupied projects from insolvency proceedings entirely.
On the RERA-IBC coordination front, the committee has called for stronger synergy between the two frameworks, uniform standard operating procedures across states, and RERA’s active role in post-resolution monitoring. It has also recommended the creation of specialised NCLT benches for real estate matters in key jurisdictions such as Delhi and Mumbai , a chronic gap that has contributed to delays and adjudications that sometimes lack sector-specific nuance.
For homebuyers, the recommendations include a moratorium on home loan instalments during the CIRP period, simplified claims processes, stronger accountability standards for Authorised Representatives, and the right to choose between possession and refund in resolution plans.
What Happens Next
The report is now with the IBBI for consideration. However, several of the recommendations, particularly those relating to admission thresholds, homebuyer rights, and the RERA-IBC interface, will require amendments to the IBC itself before they can be operationalised. That means the path from recommendation to relief runs through Parliament.
For the homebuyer who has been waiting years for possession, this report is a signal that the system is listening. Whether it acts, and how quickly, remains to be seen. But if the recommendations are accepted and the law amended accordingly, the insolvency framework for real estate could finally become what it was always meant to be: a mechanism for completion, not just recovery.
Download Report
Want to read the full report? Download the full report here – Report of the Committee on Framing Guidelines for Insolvency Proceedings in Real Estate Sector, April 2026 – A report published by the Insolvency and Bankruptcy Board of India (IBBI).
Disclaimer:
The information contained in this article is provided for general informational purposes only and does not constitute legal advice. Readers should not act or refrain from acting on the basis of any content included herein without seeking appropriate legal or professional advice on the specific facts and circumstances at issue.
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