IBBI Pushes for Direct Flat Ownership for Debt-Free Buyers Amid Real Estate Bankruptcy Resolutions

Proposed Ownership Transfer for Buyers in Possession

The Insolvency and Bankruptcy Board of India (IBBI) has proposed that homebuyers who are debt-free and already in possession of their property should be granted ownership, even during the bankruptcy resolution of the distressed real estate firm. This proposal, however, will require approval from the committee of creditors (CoC).

A Move to Protect Homebuyer Interests

Experts indicated that this reform could benefit thousands of homebuyers facing extended delays in registering their flats. In insolvency cases involving real estate firms, the CoC, primarily comprised of homebuyers with the status of financial creditors, holds substantial influence over resolutions.

Facilitating Faster Handover and Avoiding Delays

The IBBI has also recommended that the CoC allow resolution professionals to “hand over units to allottees on an ‘as is where is’ basis or upon payment of any outstanding balance,” streamlining the handover process. This approach is designed to prevent unnecessary delays and accelerate resolution timelines.

Real Estate Ownership: A Critical Reform “Land ownership and possession remain critical in real estate projects,” remarked Jyoti Prakash Gadia, managing director of Resurgent India, who views this reform as a significant step in enhancing the resolution process for the real estate sector.

Additional Changes to Support Effective Resolution

The IBBI has outlined seven key amendments to current insolvency regulations, including allowing land authorities as non-voting invitees to CoC meetings, ensuring associations of allottees can act as resolution applicants, and appointing facilitators to better represent large groups of homebuyers.