Enhancing Homebuyers’ Protection pursuant to CIRP Amendment Regulations 2025
The Insolvency and Bankruptcy Board of India (“IBBI”) has notified Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) (Amendment) Regulations, 2025 (“Amendment Regulations”), amending certain provisions of IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2016. The Amendment Regulations focus on further streamlining the Corporate Insolvency Resolution Process (“CIRP”) of corporate debtors having real estate projects.
This article aims to examine the following amendments introduced under the Amendment Regulations and analyze their role in enhancement of CIRP of real estate developers and in securing the rights of allottees (commonly the homebuyers) –
(a) Handoverof possession to allottees during CIRP as per Regulation 4E read with Regulation30C; and
(b) Competent Authorities’ participation in meetings of Committee of Creditors (“CoC”) as per Regulation 18(4).
AMENDMENTSOF THE CIRP FRAMEWORK BY THE AMENDMENT REGULATIONS
1. Handover of possession to allottees during CIRP (Regulation4E read with Regulation 30C)
Regulation 4E of the Amendment Regulations provides a defined mechanism within the CIRP framework, enabling Resolution Professional’s (“RPs”) to hand over possession of plots, apartments, or buildings to homebuyers during ongoing insolvency proceedings. The amendment stipulates three key conditions for such handover i.e., (a) CoC must approve the handover with at least 66% voting share, (b) allottee must specifically request possession, and (c) the allottee must have fulfilled all contractual obligations under the relevant agreement with the real estate developer under CIRP.
The provision also empowers RPs to facilitate the registration of such properties, thereby completing the ownership transfer process even as the CIRP continues.
Prior to this amendment, Section 14 of the Insolvency and Bankruptcy Code, 2016 (“IBC”) imposed a moratorium prohibiting any transfer or alienation of the corporate debtor’s assets during CIRP. As a result, allottees who had substantially or fully discharged their payment obligations were left without possession or title until the insolvency process was concluded.
Prior to the Amendment Regulations, any issues arising pertaining to delivering possession or registering completed units during CIRP, were being dealt by the courts on a case-to-case basis. For instance, in Alok Sharma v. IP Construction Private Limited[1], the National Company Law Appellate Tribunal directed the RP to execute sale deeds for homebuyers who had taken possession prior to CIRP commencement, holding that such registration would not violate the moratorium specified under IBC. This judgment provided clarification that units which were already paid for and in possession of buyers should not be considered as assets of the corporate debtor duringinsolvency proceedings.
Similarly, in New Okhla Industrial Development Authorityv. Lotus 300 Apartment Owners Association & others[2], the Supreme Court directed the handover of completed units to homebuyers who had fulfilled their payment obligations.
Regulation 4Enow introduces a defined process for handing over and registering completed units during CIRP. It permits possession to be given to allottees who have met their payment obligations, once approved by the CoC.
To support the CoC’s decisions on handing over possession under Regulation 4E and to mitigate subsequent delays in giving effect to possession or resolution plan, Regulation30C, requires the RP to prepare and present to the CoC a report on status of the development rights and requirement of permissions for each real estate project. The RP must share this report with the CoC for their comments and then submit it to the Adjudicating Authority within 60 days from the start of the insolvency process.
2. Participation of Competent Authorities in CoC Meetings (Regulation 18(4))
The inclusion of allottees as financial creditors was earlier contemplated under the Insolvency and Bankruptcy (Second Amendment) Act, 2018, thus, giving them representation and voting rights in COC meetings. This reform strengthened the position of homebuyers but did not create a mechanism for the participation of other regulatory stakeholders essential to real estate projects.
To address this, Regulation 18(4) establishes a formal mechanism for involving such competent authorities in the CIRP process. It enables the CoC to direct the resolution professional (RP) to invite the relevant land or development authority to attend CoC meetings. While these authorities will not have voting rights, they may provide crucial inputs associated with the development aspects of such project.
Hence, Regulation18(4) addresses this gap by integrating regulatory engagement into the CIRP itself rather than leaving it to ad hoc, external communication. This integration is likely to allow early identification and resolution of regulatory obstacles, build confidence among homebuyers regarding compliance status, improve coordination between insolvency proceedings and development approvals, and promote better alignment between the objectives of the IBC and regulatory frameworks such as RERA and applicable state development and municipal planning laws.
CONCLUSION
The Amendment Regulations represent a thoughtful response to the unique challenges of real estate insolvencies. By enabling possession handover during CIRP, introducing an early status report on project development rights and approvals, and facilitating regulatory participation in CoC deliberations, the IBBI has taken significant steps toward balancing stakeholder interests and enhancing the effectiveness of the insolvency resolution framework for real estate projects.
These amendments reflect a move toward a more practical and homebuyer centric approach within the CIRP while strengthening procedural clarity for other stakeholders in the CIRP process. For homebuyers, they provide clearer access to possession where payment obligations are complete and reduce uncertainty about project completion. For the insolvency process overall, these changes create earlier clarity on project approvals, bring regulators into the decision making at the right stage, and help ensure that approved plans can be carried through without avoidable delays, moving real estate insolvencies toward more timely and fair outcomes.
References:
[1] National Company Law Appellate Tribunal (New Delhi), Company Appeal (AT) (Insolvency) No. 424 of2024.
[2] 2024 SCC Online SC 5544.