IBC--Real Estate

IBBI Roadmap Towards Efficient Resolution of Real Estate Insolvency

Srivatsan Ranganathan 

The author has elaborated on the recent IBBI proposals for efficient resolution of insolvency cases in the real estate sector.

1. Starters

Recently IBBI has issued some suggestions to enhance the effectiveness of resolution under the IBC code in specific to real estate companies. This document encapsulates the proposals of IBBI to ease the resolution process. It should be remembered that the code envisages first a resolution and if the resolution fails then liquidation proceedings get kick started. The suggestions are no doubt welcome though are little belated.

2. Proposals

The following are the proposals and amendments sought by IBBI in the IBC code.

(a) Under RERA regulations (Section 3) every real estate project exceeding 500 sq. mts. or comprising more than 8 apartments requires a mandatory registration with the RERA authority. Under IBC code if a real estate entity is the Corporate Debtor, in the resolution process one of the key issues is pendency or laissez faire of the RERA registration post facto declaration of corporate insolvency. To continue/complete and monetize the said project on merits a mandatory requirement to register and seek extension of the RERA registration is a must. It is not that this was not happening before. Now this is getting a legal mandate and it is unlikely that the RERA authorities will refuse registration or extension of the registration of the project under resolution.