IBBI plans protection for performing realty projects in boost for homebuyers: Report

Real estate industry has around one-third of the insolvency cases nearly at 8,500 under the Insolvency and Bankruptcy Code.

India may soon tweak laws to protect performing real estate projects from slipping into insolvency battles over default in developer’s other projects, a report by Mint said on November 4.

This could provide a boost to homebuyers as it will not affect their interests in projects that are being executed without any issues. The proposal could also lower the burden on bankruptcy courts going ahead as real estate industry accounts for a major share of the insolvency cases in India, the report said.

Under the proposal, the Insolvency and Bankruptcy Board of India (IBBI) has established a panel to examine a framework that allows insolvency resolution at the level of individual projects, the paper said citing sources.

As of now, the resolution process is undertaken at the level of companies and covers all the projects, stressed or non-stressed, the newspaper said.

In addition, this proposal is likely to be an exception made for the real estate sector as the industry has widespread public-interest ramifications, the report said.

Real estate industry has around one-third of the insolvency cases nearly at 8,500 under the Insolvency and Bankruptcy Code.