The Insolvency and Bankruptcy Board of India (IBBI) has ushered in a transformative change for the real estate sector by notifying the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) (Fifth Amendment) Regulations, 2026. Effective October 30, 2026, these regulations introduce a comprehensive framework for project-specific insolvency resolution, addressing long-standing grievances regarding the commingling of funds and the lack of clarity in delivering project-wise possession to homebuyers. By mandating segregated financial operations and heightened oversight, the IBBI seeks to prevent the collapse of viable real estate projects during the broader corporate insolvency process.

Under the new regulatory regime, the interim resolution professional or the resolution professional is now required to maintain separate bank accounts for each individual real estate project owned by a corporate debtor. This measure is designed to ensure that financial inflows and outflows for one project do not subsidize or mask the liabilities of another, thereby enforcing strict compliance with the Real Estate (Regulation and Development) Act, 2016. Furthermore, the resolution professional must present project-wise statements of receipts and payments to the committee of creditors at intervals deemed appropriate, allowing for a more granular assessment of the project's financial health.

The amendment empowers the committee of creditors with the authority to isolate specific real estate projects. By achieving a minimum sixty-six percent vote, the committee may recommend to the Adjudicating Authority that a particular project be excluded from the corporate insolvency resolution process. This provides a strategic mechanism to ring-fence functioning projects from those that are essentially unviable, preventing a contagion effect where a singular failed project jeopardizes the completion of others within the same corporate entity.

A pivotal feature of this amendment is the formal recognition of homebuyers' interests within the governing structures of an insolvency case. For the first time, the Monitoring Committee must include either an authorized representative of the creditors in a class or an individual chosen by a majority vote of the allottees. Additionally, the regulation provides for the potential inclusion of representatives from the concerned Real Estate Regulatory Authority and the designated competent authority, fostering a collaborative approach to resolution.

To ensure the technical feasibility of recovery plans, the resolution professional—with the prior approval of the committee—is mandated to appoint independent professionals to conduct a comprehensive assessment of each project. This assessment, which must be completed before inviting expressions of interest, includes the current status of physical construction, regulatory approvals, inventory of sold and unsold units, and the estimated costs required for completion. This information is now a mandatory component of the information memorandum, ensuring that prospective resolution applicants have full visibility of the risks and funding requirements before entering the fray.

The requirements for resolution plans have been significantly tightened. Every plan concerning a corporate debtor with real estate interests must now delineate project-wise and phase-wise timelines for the completion and delivery of possession. The regulations explicitly require that these plans address the treatment of allottee claims , whether through the delivery of units, the execution of conveyance deeds , or the refund of amounts paid. As stated in the regulatory filing, resolution plans must provide for "project-wise details including total number of units sanctioned, constructed and under construction, with segregation of sold and unsold units."

Furthermore, the IBBI has addressed procedural gaps regarding pending claims and litigation. The resolution professional is tasked with maintaining detailed records of allottees whose claims may not have been submitted but are reflected in the books of the corporate debtor or the records of the Real Estate Regulatory Authority. This ensures that no homebuyer is unfairly excluded from the process due to a lack of formal filing, provided their identity and interest are corroborated by available institutional records.

The regulations also clarify the continuity of the resolution professional's duties. It is now expressly established that the resolution professional shall continue to discharge all responsibilities under the corporate insolvency resolution process until the Adjudicating Authority decides upon any application for withdrawal under Section 12A of the Insolvency and Bankruptcy Code. This provision eliminates ambiguity regarding the management of the corporate debtor during the pendency of withdrawal requests.

As the industry moves toward this new project-specific paradigm, the amendment places the burden of transparency squarely on the shoulders of the resolution professionals. The inclusion of "technical and cost-to-complete assessment" as a mandatory disclosure signifies a shift from generalized corporate-level resolution to a project-centric model. By linking the insolvency process to the project status as recorded under the Real Estate (Regulation and Development) Act, 2016, the IBBI aims to align insolvency outcomes with the ground reality of construction and delivery.

These regulations now serve as the primary guide for stakeholders, and the Monitoring Committee is tasked with oversight of progress reports submitted on a periodic basis. This new mandate is expected to streamline the resolution of stalled real estate projects by ensuring that creditors and homebuyers are no longer navigating the process in the dark. The implementation of these changes marks a definitive step toward restoring confidence among homebuyers while providing a structured pathway for the revival of the real estate sector. The next phase will observe how the Adjudicating Authority exercises its discretion in evaluating the committee-recommended exclusions of specific projects.