IBBI Proposes Reforms to Streamline Real Estate Insolvency

Mumbai / November 8, 2024: The Insolvency and Bankruptcy Board of India (IBBI) has proposed significant reforms to streamline the insolvency process for real estate companies and enhance protection for stakeholders.

The key proposal is to include land authorities as invitees in Committee of Creditors (CoC) meetings, without voting rights. This will ensure that land authorities, who play a crucial role in real estate projects, have a voice in the decision-making process.

Another important proposal is to address the issue of cancelled land allotments. The IBBI suggests that resolution professionals should report such cancellations to the CoC, enabling stakeholders to make informed decisions about the future of the project.

To improve communication and representation, the board recommends allowing for multiple facilitators in cases with a large number of creditors.

Furthermore, the IBBI proposes to enhance transparency by making CoC meeting minutes accessible to all creditors through a secure online system. This will help counter misinformation and rumors.

The board also aims to streamline the process of transferring ownership to homebuyers who have fulfilled their financial obligations, subject to CoC approval.

The IBBI has invited stakeholders to submit comments on the proposed reforms by November 27. The board aims to implement these changes through amendments to the Insolvency and Bankruptcy Code (IBC) rules. These reforms are expected to improve the efficiency and effectiveness of real estate insolvency proceedings, ultimately benefiting both creditors and homebuyers.