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IBBI Panel Recommends Project-Wise Insolvency Resolution for Real Estate Cases

  • by- Grihik
  • Apr 9, 2026
A committee of the Insolvency and Bankruptcy Board of India has recommended shifting from an entity-centric, recovery-focused framework to a project-centric, completion-driven approach for real estate insolvency cases.
IBBI Panel Recommends Project-Wise Insolvency Resolution for Real Estate Cases

New Delhi, April 9: The Committee on Framing Guidelines for Insolvency Proceedings in the Real Estate Sector submitted its report to IBBI Chairperson Ravi Mital on April 7, 2026.

Key Recommendation: Project-Wise Resolution

The committee recommended that the corporate insolvency resolution process (CIRP) in the real estate sector "should ordinarily be admitted on a project-wise basis , with each real estate project treated as an independent economic unit for the purposes of insolvency admission and resolution."

Benefits of Project-Wise Admission

  • Admission may be confined to the defaulting project only

  • Solvent or unrelated projects of the same developer can continue operating

  • Protects non-defaulting projects from being dragged into insolvency

Key Statistics

  • Issues examined: 55

  • Recommendations made: 155

No to 'Reverse CIRP'

The committee does not recommend "reverse CIRP" (allowing existing promoters to complete insolvent projects), though it has been practised in a few cases under judicial orders.

Clean Slate Principle

The committee recommended strict enforcement of the 'clean slate' principle:

  • Protection extends to all real estate-specific liabilities (property taxes, EDC, regulatory penalties)

  • Waiver of all penal interest and fines upon approval of resolution plan

  • Municipalities should not withhold future approvals (OC/CC) for pre-CIRP arrears settled under resolution plan

RERA and Escrow Accounts

The IBBI may specify that escrow accounts linked to real estate projects under CIRP should not be frozen by RERA just because the case has been admitted under CIRP. They must remain operational to receive homebuyer receivables and funds for construction.

Technical Audit Requirement

Immediately upon admission, the resolution professional should appoint an independent technical agency to conduct:

  • Audit of physical progress of construction (tower-wise/unit-wise)

  • Detailed Cost-to-Complete estimates based on current market rates

  • Status of all statutory approvals

Supreme Court Direction

The IBBI constituted this committee pursuant to the Supreme Court's direction in its judgment dated September 12, 2025 (Mansi Brar Fernandes v. Shubha Sharma & Ors.), directing IBBI to frame sector-specific guidelines for real estate insolvency.

Core Philosophy

IBBI stated: "The ultimate measure of success lies not in procedural metrics but in the delivery of homes, restoration of trust, and revival of stalled economic value ."