IBBI Committee's 155-Point Blueprint Marks Turning Point for India's Stressed Housing Sector

The IBBI Committee on Framing Guidelines for Insolvency Proceedings in the Real Estate Sector has submitted a report that many in the industry are calling the most significant overhaul of real estate insolvency law since the IBC was enacted in 2016. Jayanti Prasad who serves as a Whole Time Member of the Insolvency and Bankruptcy Board of India leads a team that developed a 155-point blueprint to solve the problem which has remained unsolved for ten years and affects homebuyers lenders and developers because of its use of an inappropriate universal insolvency system for real estate cases.

For lakhs of homebuyers waiting on incomplete flats, this report could be the turning point. For investors tracking stressed real estate assets, it changes the risk calculus entirely. Here is everything you need to know.

What Is the IBBI Committee’s 155-Point Blueprint?

The IBBI established the Committee on Framing Guidelines for Insolvency Proceedings in the Real Estate Sector because the Supreme Court issued a directive to create this committee during its Mansi Brar Fernandes versus Shubha Sharma and Others decision in September 2025. The court directed the IBBI to develop insolvency guidelines that would apply specifically to different sectors after consulting with RERA authorities. 

The committee filed its final report, which included 155 recommendations, during April 2026. The fundamental argument states that real estate insolvency needs to be treated as a separate legal category from corporate insolvency, which should be reflected in legal systems.

Key Objectives of the Report

• Shift from entity-centric recovery to project-centric completion
• Protect homebuyers whose primary need is possession, not financial recovery
• Align IBC with RERA’s existing project-wise registration model
• Improve resolution speed and stakeholder confidence
• Strengthen coordination between insolvency professionals and RERA authorities

Also Read: Bengaluru Property Market Remains Strong in Q1 2026 with Sales Growth by 5 Percent

The Problem: Why the Current Framework Fails Homebuyers

India’s insolvency framework treats a real estate developer as a single corporate entity. When insolvency is admitted, all projects, viable or not, enter the Corporate Insolvency Resolution Process (CIRP) together. The consequences play out the same way every time.

• Healthy projects get dragged into proceedings alongside financially distressed ones
• A blanket moratorium halts construction across all sites simultaneously
• Financial creditors prioritise loan recovery over flat delivery
• Homebuyers, even those who paid in full, wait years with no resolution
• RERA oversight weakens or disappears entirely during CIRP

The IBBI Committee report calls this the entity-centric trap, and the 155 recommendations are its proposed exit.

5 Core Pillars of the IBBI Committee’s Blueprint

1. Project-Wise Insolvency Admission

The most consequential recommendation: insolvency in real estate should ordinarily be admitted on a project-wise basis. Each project becomes an independent unit for admission and resolution. This mirrors how RERA already treats projects individually, separate registrations, separate compliance, separate escrow.

Why does this matter? Because it means a developer’s 10 projects are no longer all penalised for the failure of one. Buyers in Project A are not collateral damage when Project B defaults.

2. Procedural Consolidation of Land and Development Rights

Real estate ownership structures in India are often split. The land sits with one entity, the development rights with another. Under the current framework, this creates legal gridlock during CIRP.

The committee recommends treating the land-holding entity and the development entity as a single economic unit for the limited purpose of resolution. This removes a major structural obstacle to project completion.

3. Mandatory Project-Wise Escrow Accounts

Upon CIRP admission, the Resolution Professional must operate a separate escrow account for every real estate project. Funds collected from buyers for Project A cannot be used to service liabilities of Project B. This aligns with RERA’s own 70% escrow mandate and closes a critical loophole that has historically drained buyer funds.

4. Mandatory Construction Audit at Admission

The committee recommends that the Resolution Professional immediately appoint an independent technical agency to conduct a comprehensive audit covering:

• Physical construction progress at tower and unit level
• Cost-to-Complete (CtC) estimation depending on prevalent market trends
• The project needs to provide complete details about its statutory approvals and RERA registration status.

This audit creates a factual baseline that prevents disputes, informs resolution plans, and protects buyer interests from the very first day of CIRP.

5. RERA–IBC Alignment

The blueprint mandates compulsory RERA registration of all real estate projects undergoing CIRP and formal coordination between resolution professionals and Real Estate Regulatory Authorities. This ends the regulatory vacuum that currently exists when a project enters insolvency.

Entity-Wise vs. Project-Wise Insolvency

What This Means for Homebuyers, Developers and Lenders

Judicial and Legislative Support Behind the Recommendations

The IBBI Committee’s blueprint does not arrive without precedent. It is built on a solid judicial and legislative foundation:

• Supreme Court, September 2025: Mansi Brar Fernandes vs. Shubha Sharma, Directed IBBI to frame sector-specific guidelines, including project-wise CIRP timelines
• NCLAT: Flat Buyers Association Winter Hills-77 vs. Umang Realtech: First recognised project-specific resolution as a viable mechanism under IBC
• Amitabh Kant Committee Report: Recommended IBC reform aligned with RERA’s project-wise registration model for legacy stalled projects
• IBBI CIRP Amendment, February 2024: Allowed Resolution Professionals to invite separate resolution plans for individual real estate projects, laying the regulatory groundwork
• IBBI CIRP Amendment, February 2025: Allowed RPs to hand over completed units to homebuyers during CIRP with 66% CoC approval

Also Read: TOD 2026: How Delhi's New Metro Housing Policy Is Rewriting Real Estate Rules

What Could Complicate Implementation?

The blueprint is progressive. But implementation will face real friction.

Legal Definition Gap

Section 3(23) of the IBC defines ‘person’ in a way that does not recognize a real estate project as a separate legal entity. Without a legislative amendment, project-wise admission will face repeated legal challenges at the NCLT and NCLAT.

Administrative Burden on Resolution Professionals

A developer with 15 to 20 active projects could face parallel CIRP proceedings across multiple projects simultaneously. Managing separate committees of creditors, escrow accounts, and resolution plans for each project significantly increases the operational complexity and cost for resolution professionals.

Creditor Coordination Complexity

Different projects have different mixes of financial creditors, homebuyers, and operational creditors. Separate Committees of Creditors (CoC) for each project could produce conflicting decisions, especially where lenders have cross-collateralised security across projects.

Conclusion

India's real estate insolvency system required this specific adjustment to its current operations. The IBBI Committee developed a 155-point plan that represents the most organized and thorough initiative to bridge the gap between insolvency law and actual practices in the housing industry. The system changes its entire focus from protecting creditor interests to ensuring project completion because homebuyers represent the highest risk group in the process. 

The process of making these recommendations into actual laws needs both IBC legal changes and IBBI and RERA state authorities to work together. The path forward has become obvious. The combination of Supreme Court support and IBBI dedication and increasing political pressure from stranded homebuyers creates the most powerful case for project-wise insolvency that has existed to date. 

The blueprint provides buyers who face project delays with their most reliable source of hope in a long period.