IBBI proposes reforms to streamline insolvency process for real estate companies under IBC rules 

The Insolvency and Bankruptcy Board of India (IBBI) on Thursday proposed reforms to streamline the insolvency process for real estate companies and enhance protection for stakeholders. These amendments have been proposed to enhance the efficiency and effectiveness of real estate insolvency proceedings under the Insolvency and Bankruptcy Code (IBC) rules. In a discussion paper issued on Thursday, IBBI said one of the major proposals is the inclusion of land authorities in Committee of Creditors (CoC) meetings as invitees without voting rights. In corporate insolvency resolution processes (CIRP) involving real estate companies, land authorities play a crucial role but currently lack mandatory representation in the CoC. Currently, only financial creditors have representation in the CoC, leaving out land authorities despite their critical role in real estate projects, Their inclusion will enhance and bring clarity on regulatory compliance, and ultimately improve the feasibility of resolution plans, it added. The discussion paper also highlighted issues related to cancelled land allotments in insolvency cases, wherein the IBBI proposed that resolution professionals report such cancellations to the CoC, allowing stakeholders to make informed decisions on whether to pursue liquidation or continue with the resolution process. Accordingly, the IBBI has asked stakeholders to provide comments on the proposals by November 27. After considering the comments, the board proposed to make rules under clause of section 196 of the code. 
 

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