Empowering Homebuyers: A Deep Dive into the IBC 2025 Amendments
The Insolvency and Bankruptcy Board of India (IBBI) introduced significant amendments to the Insolvency Resolution Process for Corporate Persons Regulations, 2016, effective from February 3, 2025. These changes aim to enhance the rights and protections of homebuyers involved in real estate insolvency proceedings.
Key Amendments and Their Implications
1. Regulation 4E: Facilitating Possession During CIRP
Under the newly inserted Regulation 4E, Resolution Professionals (RPs) are empowered to hand over possession of plots, apartments, or buildings to homebuyers during the Corporate Insolvency Resolution Process (CIRP), provided:
- The Committee of Creditors (CoC) approves with at least 66% voting share.
- The homebuyer has fulfilled all obligations under the agreement.
This provision addresses the prolonged delays homebuyers often face, allowing them to take possession without waiting for the completion of the entire insolvency process.
2. Regulations 16C and 16D: Introduction of Facilitators
To improve communication and representation among large groups of creditors, especially homebuyers:
- Facilitators can be appointed when a creditor class exceeds 1,000 members.
- A subgroup of at least 100 creditors can request the appointment of a facilitator.
- Up to five facilitators may be appointed, each receiving 20% of the fee designated for the authorized representative.
Facilitators serve as a bridge between the authorized representative and the creditors, ensuring effective communication and representation.
3. Regulation 18(4): Inclusion of Real Estate Regulatory Authorities
The CoC can now invite competent authorities, as defined under the Real Estate (Regulation and Development) Act, 2016, to attend meetings (without voting rights) to provide inputs on matters related to the development of real estate projects.
This inclusion ensures that regulatory perspectives are considered, potentially leading to more informed decision-making and smoother project execution.
4. Regulation 30C: Reporting on Development Rights and Permissions
RPs are now required to:
- Prepare a report detailing the status of development rights and permissions for real estate projects.
- Submit this report to the CoC for comments.
- File the report, along with CoC comments, with the Adjudicating Authority within 60 days of the insolvency commencement date.
This measure enhances transparency and allows stakeholders to make informed decisions regarding the project’s future.
5. Regulation 38: Establishment of Monitoring Committees
To ensure effective implementation of approved resolution plans:
- A Monitoring Committee, comprising the RP, other insolvency professionals, CoC representatives, and the resolution applicant, will be constituted.
- The committee is tasked with overseeing the execution of the resolution plan and submitting quarterly progress reports to the Adjudicating Authority.
Broader Implications for Homebuyers
These amendments collectively aim to:
- Enhance Transparency: By mandating detailed reporting and involving regulatory authorities, stakeholders gain clearer insights into project statuses.
- Improve Representation: The introduction of facilitators ensures that large groups of homebuyers have effective communication channels within the insolvency process.
- Accelerate Possession: Allowing possession during CIRP reduces the waiting period for homebuyers, providing much-needed relief.
- Ensure Accountability: Monitoring Committees oversee the faithful execution of resolution plans, safeguarding homebuyers’ interests.
Conclusion
The 2025 amendments to the IBC represent a significant step toward addressing the challenges faced by homebuyers in real estate insolvencies. By introducing mechanisms for timely possession, improved communication, and enhanced oversight, these changes aim to restore confidence among homebuyers and ensure their interests are adequately protected during insolvency proceedings.
For a detailed review of the official amendment notification, please refer to the IBBI Press Release No. IBBI/PR/2025/03.