IBBI Notifies Amendments to CIRP Regulations to Strengthen Creditor Representation and Streamline Real Estate Resolution

Introduction

The Insolvency and Bankruptcy Board of India (‘IBBI’) introduced the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) (Amendment) Regulations, 2025 (‘Amended Regulations’) vide notification[i]. It aimed at streamlining and strengthening procedural aspects of the Corporate Insolvency Resolution Process (‘CIRP’), especially in real estate insolvencies and matters involving large classes of creditors.

The Amended Regulations introduce substantive additions to the 2016 Regulations, including mechanisms for early possession by allottees, the appointment of facilitators to enhance communication within large creditor classes, and reporting obligations regarding development rights in real estate projects. These changes seek to streamline the CIRP framework and address long-standing concerns around representation and transparency in real estate-led insolvencies.

Overview of the Key Amendments

 i. Handover of Possession to Allottees

A newly inserted regulation (r. 4E) empowers the resolution professional (‘RP’) to hand over possession of plots/apartments/buildings to allottees in real estate projects, provided the allottee has fulfilled their part of the contractual obligations and the Committee of Creditors (‘CoC’) approves the handover with at least 66% voting.

ii. Facilitator Mechanism for Large Creditor Classes

Under rs. 16C and 16D, where the number of creditors in a class exceeds 1,000, the CoC may appoint facilitators (up to a maximum of 5) to assist communication between the authorised representative and sub-classes of at least 100 creditors. The facilitators’ fee is capped at 20% of the fee of the authorised representative, and such expense shall form part of CIRP costs.

iii. Enhanced Role of Facilitators

The facilitators shall aid communication, attend CoC meetings as observers, provide clarifications to creditors (as advised by the authorised representative), and carry out tasks delegated by the CoC to improve coordination and participation.

iv. Participation of Competent Authority in Real Estate Projects

In CIRP matters involving real estate projects, the CoC may invite the relevant ‘competent authority’ under the RERA to attend CoC meetings (without voting rights) to offer insights on project development-related matters (r. 18(4)).

v. Reporting on Development Rights and Permissions

Under r. 30C, RPs are required to prepare and submit a report detailing the status of development rights and statutory permissions in relation to real estate projects. This report is to be shared with the CoC and subsequently submitted to the Adjudicating Authority within 60 days of the CIRP commencement date.

vi. Relaxation of EoI Criteria for Homebuyer Associations

In real estate matters, the CoC is now empowered to relax eligibility conditions for submission of expression of Interest (EoI) and refundable deposit requirements for associations or groups of allottees representing at least 10% or 100 homebuyers, whichever is lower (r. 36A(4)(e)).

vii. Monitoring Committee for Implementation of Resolution Plan

A new framework under r. 38(4) allows the constitution of a Monitoring Committee (comprising the RP, other professionals, or representatives) to oversee implementation of the resolution plan. Where the RP is part of the committee, the fee payable shall not exceed the fee drawn during the CIRP.

viii. Mandatory MSME Registration Disclosure

Form G (Schedule I) now requires disclosure of the corporate debtor’s MSME registration status under the MSME Development Act, 2006. This change is intended to bring clarity to the classification and eligibility considerations under IBC.

Our Analysis

The Amended Regulations are a significant step forward in resolving longstanding practical challenges in the implementation of CIRP, particularly in real estate matters where the interests of allottees are often delayed or sidelined due to procedural inefficiencies. By authorising the RP to hand over possession where conditions are met, the IBBI has introduced a pragmatic tool that can help restore homebuyer confidence and ensure the timely resolution of real estate insolvencies.

Additionally, the facilitator mechanism addresses the logistical difficulties that arise in CIRPs involving thousands of creditors. By segmenting creditor classes into manageable sub-groups and enabling direct engagement through facilitators, the IBBI has introduced a structurally sound solution that supports meaningful representation and better communication.

The compliance-enhancing provisions, such as reporting on development rights, involvement of RERA authorities, and disclosure of MSME status, collectively reflect a shift toward greater transparency and administrative accountability in insolvency proceedings.

That said, the effectiveness of these amendments will ultimately depend on their implementation by resolution professionals and oversight by Adjudicating Authorities. Moreover, care must be taken to ensure that the newly inserted roles and reporting requirements do not create additional procedural burden or cost inefficiencies that may deter resolution applicants or slow down the process.

End Note

[i] F.No. IBBI/2024-25/GN/REG122 dated 03.02.2025.

Authored by Ritik Kumar Jha, Advocate at Metalegal Advocates. The views expressed are personal and do not constitute legal opinions.