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India's Realty Insolvency Reforms Speed Up Project Completion
1 Jul
Summary
- Proposed reforms aim to speed up real estate insolvency processes.
- Completed projects may be excluded from bankruptcy with creditor approval.
- Project-specific cash flow management will be mandated.
India's Insolvency and Bankruptcy Board of India (IBBI) has proposed significant reforms to expedite the resolution of real estate insolvencies. The proposed changes aim to prioritize project completion over liquidation, thereby enhancing transparency for homebuyers and strengthening accountability.
A key proposal allows for the exclusion of completed or substantially completed housing projects from the insolvency process, provided there is approval from financial creditors. This measure seeks to minimize disruption to ongoing projects and focus intervention on those genuinely requiring it. The IBBI has also called for mandatory project-wise cash flow management to prevent fund diversion.
Further proposed regulations include streamlining the handover of possession to buyers, simplifying claim forms, and ensuring mandatory disclosures in resolution plans. The regulator has invited stakeholders to submit their feedback on the discussion paper by July 21, seeking to refine the process for the benefit of all parties involved.
