Panel recommends 155 measures for insolvency guidelines for real estate projects
Project-wise insolvency admission, mandatory operation of project-wise escrow accounts amongst key proposals to fast-track resolution, completion of projects
- Apr 8, 2026,
- Updated Apr 8, 2026 8:22 PM IST
A high-powered committee to look into insolvency guidelines for real estate projects has come up with 155 recommendations, including project-wise insolvency admission, procedural consolidation of land and development rights as well as mandatory operation of project-wise escrow accounts. The recommendations are aimed at improving efficiency, ensuring timely completion of projects, enhancing stakeholder confidence, and strengthening alignment between insolvency processes and sectoral regulation. The Committee on Framing Guidelines for Insolvency Proceedings in the Real Estate Sector chaired by Jayanti Prasad, Whole Time Member of the Insolvency and Bankruptcy Board of India submitted its report on Wednesday. “The report recognises that real estate insolvency presents unique challenges, as it directly affects large numbers of homebuyers whose primary expectation is completion and delivery of homes rather than financial recovery,” said an official release. It highlights the need for a shift from an entity-centric, recovery-focused framework to a project-centric, completion-driven approach, with stronger coordination between the IBC and the Real Estate (Regulation and Development) Act, 2016. The IBBI had constituted the committee last year following directions of the Supreme Court in its September 2025 ruling in the case of Mansi Brar Fernandes versus Shubha Sharma and others. The Supreme Court had directed the IBBI, in consultation with Real Estate Regulatory Authorities (RERAs), to frame sector-specific guidelines for real estate insolvency, including timelines for project-wise corporate insolvency resolution processes and safeguards for allottees. In all, the committee examined 55 key issues affecting real estate insolvency and has made 155 recommendations covering structural, procedural, and institutional aspects of the framework. “The Committee’s examination of insolvency data reveals that the real estate sector constitutes one of the largest and most complex segments within the insolvency ecosystem. Hundreds of real estate cases have been admitted since the Code’s inception,” said the report, adding that a large proportion of these cases have been closed through resolution, settlement, review, withdrawal and liquidation. However, several cases are still ongoing, it noted. Responding to the discussion on the IBC Bill recently, Finance Minister Nirmala Sitharaman had said that of the 565 real estate cases admitted under the IBC, 111 cases involving 162,320 homebuyers had been resolved and another 210 were still in process. The Committee has recommended that the corporate insolvency resolution in the real estate sector should ordinarily be admitted on a project-wise basis, with each real estate project treated as an independent unit for the purposes of insolvency admission and resolution. It has also been suggested that the adjudicating authority should order procedural consolidation of the assets required for the project’s completion, treating the land-holding entity and the development entity as a single economic unit for the limited purpose of a resolution plan. It has also been recommended that immediately upon admission of the case from the sector, the resolution professional should appoint a reputable, independent technical agency to conduct a comprehensive audit to determine the physical progress of construction (tower-wise/unit-wise), detailed Cost-to-Complete estimates based on current market rates and status of all statutory approvals. Further, the IBBI may specify that escrow accounts linked to the real estate projects under CIRP should not be frozen by RERA just because the case has been admitted under CIRP.
A high-powered committee to look into insolvency guidelines for real estate projects has come up with 155 recommendations, including project-wise insolvency admission, procedural consolidation of land and development rights as well as mandatory operation of project-wise escrow accounts. The recommendations are aimed at improving efficiency, ensuring timely completion of projects, enhancing stakeholder confidence, and strengthening alignment between insolvency processes and sectoral regulation. The Committee on Framing Guidelines for Insolvency Proceedings in the Real Estate Sector chaired by Jayanti Prasad, Whole Time Member of the Insolvency and Bankruptcy Board of India submitted its report on Wednesday. “The report recognises that real estate insolvency presents unique challenges, as it directly affects large numbers of homebuyers whose primary expectation is completion and delivery of homes rather than financial recovery,” said an official release. It highlights the need for a shift from an entity-centric, recovery-focused framework to a project-centric, completion-driven approach, with stronger coordination between the IBC and the Real Estate (Regulation and Development) Act, 2016. The IBBI had constituted the committee last year following directions of the Supreme Court in its September 2025 ruling in the case of Mansi Brar Fernandes versus Shubha Sharma and others. The Supreme Court had directed the IBBI, in consultation with Real Estate Regulatory Authorities (RERAs), to frame sector-specific guidelines for real estate insolvency, including timelines for project-wise corporate insolvency resolution processes and safeguards for allottees. In all, the committee examined 55 key issues affecting real estate insolvency and has made 155 recommendations covering structural, procedural, and institutional aspects of the framework. “The Committee’s examination of insolvency data reveals that the real estate sector constitutes one of the largest and most complex segments within the insolvency ecosystem. Hundreds of real estate cases have been admitted since the Code’s inception,” said the report, adding that a large proportion of these cases have been closed through resolution, settlement, review, withdrawal and liquidation. However, several cases are still ongoing, it noted. Responding to the discussion on the IBC Bill recently, Finance Minister Nirmala Sitharaman had said that of the 565 real estate cases admitted under the IBC, 111 cases involving 162,320 homebuyers had been resolved and another 210 were still in process. The Committee has recommended that the corporate insolvency resolution in the real estate sector should ordinarily be admitted on a project-wise basis, with each real estate project treated as an independent unit for the purposes of insolvency admission and resolution. It has also been suggested that the adjudicating authority should order procedural consolidation of the assets required for the project’s completion, treating the land-holding entity and the development entity as a single economic unit for the limited purpose of a resolution plan. It has also been recommended that immediately upon admission of the case from the sector, the resolution professional should appoint a reputable, independent technical agency to conduct a comprehensive audit to determine the physical progress of construction (tower-wise/unit-wise), detailed Cost-to-Complete estimates based on current market rates and status of all statutory approvals. Further, the IBBI may specify that escrow accounts linked to the real estate projects under CIRP should not be frozen by RERA just because the case has been admitted under CIRP.