INTRODUCTION
The Insolvency and Bankruptcy Board of India (IBBI) has notified the Insolvency Resolution Process for Corporate Persons (Amendment) Regulations, 2025, introducing significant changes aimed at improving the efficiency, transparency, and effectiveness of the Corporate Insolvency Resolution Process (CIRP). These amendments impact multiple aspects of CIRP, including real estate projects, the role of facilitators, and creditor rights.
Key Highlights of the 2025 Amendment Regulations:
1. Handing Over Possession in Real Estate Projects
The amendment introduces Regulation 4E, which mandates that a Resolution Professional (RP), after securing at least 66% approval from the Committee of Creditors (CoC), must facilitate the handover of possession of apartments, plots, or buildings to allottees in real estate projects.
This aims to protect homebuyers’ interests and ensure smoother transfer of ownership.
2. Appointment of Facilitators for Large Creditor Groups
A new provision under Regulation 16C allows the CoC to appoint facilitators for specific sub-groups of creditors when the number of creditors in a class exceeds 1,000.
The facilitators will assist in coordinating communication between the Authorized Representative and creditors in a sub-group.
Their fee will be 20% of the fee paid to the Authorized Representative, making it part of CIRP costs.
3. Strengthening Communication with Creditors
Regulation 16D defines the roles and responsibilities of facilitators, which include:
a. Acting as a liaison between creditors and the RP.
b. Attending CoC meetings to facilitate discussions.
c. Providing information and clarifications to creditors about the insolvency process.
d. Greater Oversight in Real Estate Insolvency Cases
Regulation 18(4) mandates that where a corporate debtor has a real estate project, the CoC may invite the competent authority under the Real Estate (Regulation and Development) Act, 2016 (RERA) to attend meetings and provide insights on project development.
Regulation 30C requires the RP to submit a report on the status of development rights and permissions for real estate projects within 60 days of insolvency commencement.
4. Formation of Monitoring Committees
Regulation 38(4) provides for the establishment of a Monitoring Committee to oversee the implementation of the approved Resolution Plan.
The committee may include:
a. The Resolution Professional (if included, his monthly fee cannot exceed his CIRP fee).
b. Representatives of resolution applicants and CoC members.
c. The Monitoring Committee must submit quarterly progress reports to the Adjudicating Authority.
5. Specific Provisions for MSMEs
Regulation 36A now mandates the disclosure of a corporate debtor’s registration status under the Micro, Small, and Medium Enterprises (MSME) Act, 2006.
The CoC may relax eligibility criteria for resolution applicants in real estate cases, allowing homebuyer associations with at least 10% of total creditors or 100 creditors (whichever is lower) to bid.
Conclusion: Impact of the Amendments
These changes aim to streamline CIRP, enhance homebuyer protections, and improve creditor representation in complex insolvency cases. By introducing facilitators, mandating real estate project handovers, and enhancing monitoring mechanisms, the IBBI seeks to ensure that insolvency resolutions are both transparent and time-efficient.
These amendments, effective from February 3, 2025, mark another step in India’s evolving insolvency landscape, reinforcing the objective of timely and effective resolution of distressed assets.
Disclaimer: This blog is for informational purposes only and does not constitute any legal advice. Readers should seek expert legal counsel before taking any action based on the content.