IBC Reform to Allow Homebuyers Possession During Insolvency
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Finance Minister on Wednesday announced that the amended (IBC) will enable homebuyers to receive possession of their properties even while insolvency proceedings are ongoing. The statement came during her reply to a debate in the , which has now passed the Insolvency and Bankruptcy Code (Amendment) Bill, 2026.
The reform is aimed at providing faster and more practical relief to homebuyers affected by stalled real estate projects.
Background: Real Estate Insolvency Bottlenecks
The IBC, introduced in 2016, transformed India’s insolvency framework but faced persistent challenges in the real estate sector. Delays in resolution often left homebuyers—classified as financial creditors—waiting years for possession or refunds.
Large developers with multiple projects posed additional complications, as insolvency proceedings treated the company as a whole rather than addressing project-specific realities.
Key Reform: Project-Wise Resolution
The amendment introduces a major structural change by allowing project-wise resolution. This means that different projects within the same real estate company—such as separate towers or housing clusters—can now be resolved independently.
Under the revised framework, the Committee of Creditors (CoC) can instruct the Resolution Professional (RP) to invite separate resolution plans for individual projects, enabling faster decision-making where projects are at different stages of completion.
Additionally, regulatory authorities such as NOIDA and HUDA can now be invited to CoC meetings, ensuring better coordination on land and compliance issues.
Relief for Homebuyers
A key provision allows homebuyers to take possession of flats, plots, or buildings during the Corporate Insolvency Resolution Process (CIRP), subject to certain conditions and approvals. This eliminates the need to wait until the entire insolvency process concludes.
Further, properties already handed over to buyers will not be included in the liquidation estate of developers, protecting ownership rights and reducing legal uncertainty.
According to government data, over 1.62 lakh homebuyers have already benefited from 111 resolved real estate cases, while approximately 90,000 buyers are involved in ongoing cases. Around 50,000 additional homebuyers could receive relief as pending cases move toward approval at the (NCLT).
Industry and Civic Impact
The reforms are expected to significantly improve confidence in India’s real estate sector, which has faced trust deficits due to delayed projects. By prioritising possession and project-level resolution, the amendments aim to balance the interests of lenders and homebuyers.
From a civic perspective, the move directly addresses middle-class concerns, particularly for families whose savings are locked in incomplete housing projects.
Conclusion
The passage of the IBC Amendment Bill, 2026 marks a crucial step in refining India’s insolvency framework for the real estate sector. By enabling faster, project-specific resolutions and prioritising homebuyer relief, the government aims to restore confidence and accelerate recovery in the housing market.
Our Final Thoughts
The latest IBC reforms signal a pragmatic shift in addressing one of the most sensitive issues in India’s real estate sector—delayed housing delivery. Allowing possession during insolvency proceedings could redefine how distressed projects are resolved, offering tangible relief rather than prolonged uncertainty. While implementation will be key, the move has the potential to rebuild trust among homebuyers and bring greater efficiency to the insolvency process. If executed effectively, it could mark a turning point in aligning legal frameworks with real-world housing needs.