Overview of Amendments to the IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2016
The Insolvency and Bankruptcy Board of India (IBBI) has introduced amendments to the IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 through Notification No. IBBI/2024-25/GN/REG122, dated 03.02.2025. These amendments aim to enhance transparency and efficiency in the corporate insolvency resolution process (CIRP), particularly in relation to real estate projects.
Handing Over the Possession (Regulation 4E)
Regulation 4E has been incorporated, empowering the Resolution Professional to hand over flats, buildings, or apartments during the resolution process to homebuyers after taking approval from the Committee of Creditors, provided that homebuyers have fulfilled all obligations. This will ensure that distressed homebuyers will not have to wait long to gain possession of their properties.
This amendment ensures that homebuyers or allottees who have fulfilled their contractual obligations receive possession of their units in a real estate project. The resolution professional must facilitate the handover only after receiving approval from 66% of the Committee of Creditors (CoC).
Appointment of Facilitators (Regulation 16C)
Furthermore, Regulation 16C allows the Committee of Creditors to direct the interim or resolution professional to appoint another insolvency professional as a facilitator for a subclass within the creditors of that class when the number of creditors in a class exceeds 1,000.
The appointment of the facilitator shall be considered by the Committee only when a subclass comprising at least 100 creditors requests it and proposes a facilitator’s name. Additionally, the total number of facilitators shall not exceed five, and the fee for each facilitator shall be 20% of the fee paid to the authorized representative, forming part of the insolvency resolution process cost. Once appointed, a facilitator can be replaced by the Committee if a majority from the subclass recommends it.
This amendment will ensure effective participation of homebuyers in the insolvency process. The facilitators will facilitate communication between the authorized representative and creditors assigned to them, as well as provide information to creditors about the insolvency resolution process.
Participation of Competent Authority in Committee Meetings (Regulation 18(4))
Regulation 18(4) permits the Committee to direct the Resolution Professional to invite the competent authority related to the corporate debtor’s real estate project to attend committee meetings without voting rights, for input on matters associated with project development. The Committee of Creditors (CoC) can now invite relevant land authorities, such as HUDA and NOIDA, to meetings to gain their opinions on land development and regulations. This involvement will enhance the viability of resolution plans and bolster stakeholder confidence in the resolution process.
Report on the Status of Development Rights and Permissions of Real Estate Projects (Regulation 30C)
Resolution Professionals are now required to prepare a detailed report on the status of development rights, approvals, and permissions for the corporate debtor’s real estate projects within 60 days from the insolvency commencement date.
Expression of Interest (Regulation 36A & Form G Updates)
A new provision in Regulation 36A states that the committee may relax eligibility criteria for submitting expressions of interest and conditions regarding the refundable deposit for an association or group of allottees representing not less than 10% or 100 creditors, whichever is lower, in a real estate project.
Performance Security Requirement in Resolution Plans (Regulation 36B(4A))
Regulation 36B(4A) mandates that the resolution applicant provide a performance security, which will be forfeited if, after the approval of the plan under section 30(4) of the Code by the Adjudicating Authority, the applicant fails to implement the plan or contributes to its failure.
Monitoring Committee (Regulation 36B(4))
Regulation 36B(4) provides that the committee shall consider establishing a monitoring committee to supervise the implementation of the resolution plan. This committee may include resolution professionals, representatives from the committee, and representatives of the resolution applicants. If the resolution professional is part of the monitoring committee, their fee shall remain the same as during the corporate insolvency resolution process. The monitoring committee must submit a quarterly report to the Adjudicating Authority outlining the implementation status of the plan.
MSME Registration Status
Resolution Professionals must disclose the corporate debtor’s registration status as a micro, small, or medium enterprise. This requirement will enhance the participation of prospective resolution applicants who can avail themselves of various benefits and relaxations provided to MSMEs under the Code.
Relaxations for Real Estate Allottees
The amendments will increase the participation of associations or groups of homebuyers as resolution applicants, as the Committee of Creditors is now empowered to relax specific conditions for them. These relaxations will primarily pertain to eligibility criteria, performance security, and deposits for submitting resolution plans.