In the first part of this two-part series, we examined the challenges facing the homebuyers in real-estate-related insolvencies, and the implications of the new amendments to the Insolvency and Bankruptcy Code (IBC). Now, we look at how regulations of the Insolvency and Bankruptcy Board of India (IBBI) address some of the homebuyers’ demands, and whether there is a need for a unified law, as the Government feels, or a separate framework for real estate.
We start with the IBBI’s (Insolvency Resolution Process for Corporate Persons) (Amendment) Regulations, 2025. Homebuyers, who are represented on the crucial Committee of Creditors (CoC) through Authorised Representatives, via the Code, often lack real influence due to delays, verification issues, and their dispersed numbers. The legal amendment, as discussed in the previous part, seeks to address these issues, and allows facilitators for large groups, such as homebuyers, to improve communication and representation.
Regulation 18(4) of the IBBI’s amendments (2025) allows for local authorities (such as NOIDA, HUDA, etc.) and regulatory bodies to participate in CoC meetings, albeit without voting rights. This allows bottlenecks related to approvals, clearances, and compliance to be directly addressed as part of the insolvency process. However, given that the CoC may invite the local authorities at its discretion, the benefit of this stipulation may be reduced in practice. We suggest that such invitations and attendances be mandated, at least for the construction-development projects.
We note the apprehension that local authorities having no vote at the CoC may result in projects continuing to be stalled, since the approvals may not be forthcoming. In our view, this may not be a concern if there is meaningful participation at the CoC, allowing the stakeholders to address local authority comments and concerns as a part of the CoC, and ensure that the resolution progresses expeditiously since local authorities have been consulted.
Note also that the local authority’s approval is concerned with municipal matters of a much larger scope than the CoC can address, and it is important to preserve the former’s independence and discretion in these matters, rather than statutorily bind it to issue approvals because of distinct participation at the CoC.
A core feature of the resolution process is the moratorium, which protects the bankrupt debtor’s assets. In the real estate sector, this sometimes results in blocking the homebuyers from taking possession or registering completed flats, even after they have made (or are willing to make) full payments for the assets. IBBI’s regulations (2025) address this through Regulation 4E, which allows the resolution professionals to hand over, and register finished units during the insolvency, albeit with CoC’s approval.
However, the resolution professionals can do so only after 66 per cent (a high threshold) CoC’s approval, which is understandable in contexts other than construction-development projects, where a home may be at stake. Therefore, we suggest a more robust and less discretionary metric, at least for the homebuyers. While the IBBI shows its intention to introduce sector-specific changes, there is a larger debate of a unified code versus sector-specific regime.
Reserved stance
The Government’s 2025 Bill, which was discussed in the first part, signals that it prefers a single, unified code, and resists carving out a separate framework for real estate. This position seems rooted in sound legislative and institutional logic, which is to avoid a fractured sector-wise insolvency regime.
However, in Mansi Brar case, the Supreme Court observed that the Government bears a constitutional obligation to protect the public’s right to housing, and cannot remain a silent spectator. The Court suggested systemic reforms to ensure this. The message is clear: Without a credible insolvency regime that prioritises the timely completion of housing projects, the real estate market risks eroding the trust of citizens, and global investors.
While the Government’s concern for a unified insolvency code is valid, there is a need for more comprehensive, sector-specific safeguards that align seamlessly with other laws, and various enforcement and regulatory agencies. For example, one aspect is the taxes and stamp duties that are paid at the time of purchase. These are sunk costs for homebuyers, if projects get stuck in the resolution process, or go into liquidation. The homebuyers receive no refunds.
Another recent example that highlights the critical need for proactive cooperation across agencies in the real estate sector and the IBC is the Supreme Court’s order (September 23, 2025) passed in Himanshu Singh v. Union of India. An investigation by the Central Bureau of Investigation was ordered into the builder-bank nexus in the Delhi-NCR subvention scheme case, where homebuyers were left saddled with loans despite incomplete projects. The system must build checks and balances to ease these burdens while addressing the realities.
Lasting solutions
The journey of the homebuyers under the IBC has been one from invisibility to recognition as sustained judicial scrutiny and policy actions eventually brought clarity. For the realtors, however, the story has been more complicated: IBC has expanded the creditors’ rights without easing the sector’s chronic structural issues, leaving developers to shoulder risks they cannot always control.
The proposed amendments in the Bill (2025) may be sound, as is the aim of a unified code. Yet to make the framework truly effective, these reforms must be buttressed by stronger coordination with RERA (Real Estate Regulatory Authority) and other local regulators, so that compliance or regulatory gaps do not derail outcomes. Real estate insolvencies cannot be resolved by the IBC in isolation. They require a framework where the law, sector regulation, and judicial oversight work together to protect buyers, and keep projects viable.
The balance lies in safeguards at the allotment stage, tighter monitoring, and stronger capacity at the NCLTs (National Company Law Tribunals) and RERA fora. Strengthening these mechanisms will allow the IBC regime to address the unique challenges of the real estate sector without affecting its core design. Relying solely on the IBC to address these issues arguably puts more weight on the code, compared to what it was, and is, designed to bear.
Ms Jaisingh is Partner and Practice Lead, Disputes Practice Group, and a multi-faceted litigator specialising in commercial disputes. Ms Gupta is Partner, with a decade-long experience in precedent-setting matters, and focuses on commercial litigation and arbitration. They work for Bharucha & Partners, a full-service law firm, catering to Fortune 500 companies, MNCs, PSUs, and not-for-profits