IBBI Mandates Project-Wise Real Estate Insolvency & Project Exclusion (Regulation 4F & 66% CoC Vote): Complete IBC & RERA Compliance Guide for CAs & CFOs
On October 30, 2026, the Insolvency and Bankruptcy Board of India (IBBI) issued a landmark regulatory overhaul targeting real estate insolvencies. Published vide Gazette Notification No. IBBI/2026-27/GN/REG155, the IBBI (Insolvency Resolution Process for Corporate Persons) (Fifth Amendment) Regulations, 2026, alongside companion Circular No. IBBI/CIRP/110/2026, fundamentally pivots real estate insolvency away from blanket corporate liquidation toward project-specific resolution and statutory ring-fencing.
For years, real estate Corporate Insolvency Resolution Processes (CIRP) under the Insolvency and Bankruptcy Code, 2016 (IBC) faced severe operational friction. When a developer entity holding five separate township developments defaulted on one stressed tower, the entire corporate entity was dragged into CIRP. Solvent, debt-free projects were dragged into prolonged moratoriums under Section 14, freezing construction, blocking unit deliveries, and trapping thousands of bona fide homebuyers. The Fifth Amendment resolves this structural bottleneck by formally codifying project-wise exclusion, mandating dedicated project-wise bank accounts, establishing mandatory technical cost assessments prior to Expression of Interest (EOI), and reserving statutory seats for allottee representatives and Real Estate Regulatory Authority (RERA) officials on the Monitoring Committee.
The Legal Framework: Decoding the Key Regulations & Mandatory Thresholds
The Fifth Amendment introduces extensive additions and substitutions across Regulations 4D, 4E, 4F, 4G, 16A, 24, 30A, 35, 36, 38, and 38A of the CIRP Regulations, 2016. Insolvency Professionals (IPs), Committee of Creditors (CoC) members, and corporate advisors must master the following statutory anchors:
Statutory Anchor 1: Regulation 4D — Dedicated Project-Wise Accounts & RERA Fund Utilisation
Substituted Regulation 4D mandates that where a corporate debtor has any real estate project, the Interim Resolution Professional (IRP) or Resolution Professional (RP) must operate a separate bank account for each real estate project.
- Periodic Cash Flow Reporting: The RP must place before the CoC, at intervals determined by the committee, a project-wise statement of receipts and payments and required financial disclosures.
- Mandatory RERA Fund Compliance: Under Regulation 4D(3), the IRP/RP must ensure that fund utilisation strictly adheres to the statutory provisions of the Real Estate (Regulation and Development) Act, 2016 (such as the mandatory 70% deposit of project receivables into designated accounts under Section 4(2)(l)(D) for land and construction costs).
Statutory Anchor 2: Regulation 4F — Identification and Exclusion of Real Estate Projects (66% CoC Vote)
Newly inserted Regulation 4F creates a formal legal mechanism to detach viable projects from the umbrella insolvency of the corporate debtor:
- First CoC Meeting Disclosure: In the very first CoC meeting, the RP must place project-wise data for all developer projects, comprising: (a) RERA registration details, (b) stage of completion, (c) possession and occupancy status, (d) count of completed vs incomplete units, and (e) other material metrics.
- 66% CoC Voting Threshold: The CoC, after reviewing this information, may by a vote of not less than 66% of voting share, recommend the exclusion of any real estate project from the CIRP to the Adjudicating Authority (NCLT) along with recorded written reasons.
- NCLT Application: Upon obtaining 66% CoC approval, the RP must submit an application before the NCLT to formally carve out the project, enabling unhindered handovers or localized handover mechanisms.
- Streamlined Allottee Handovers (Regulation 4E): The inserted Explanation to Regulation 4E clarifies that the CoC can grant either individual approvals or a blanket in-principle approval authorizing the RP to process all individual allottee possession and registration requests as they arise during CIRP.
Statutory Anchor 3: Regulation 4G & 36(2)(ja) — Technical Cost Assessments & Homebuyer Claim Protections
To eliminate speculative bidding and information asymmetry, newly inserted Regulation 4G and amended Regulation 36 introduce mandatory technical audits and record synchronization:
- Mandatory Pre-EOI Technical Audit: Before issuing the Expression of Interest (Form G under Regulation 36A), the RP must, with CoC approval, appoint one or more qualified, independent professionals under Regulation 27(3) to conduct a project-wise technical and cost-to-complete assessment.
- Assessment Scope: The report must determine physical construction status, percentage completion, regulatory compliance/approvals, inventory details (sold vs unsold), estimated funds required for completion, milestone-wise funding needs, realistic handover timelines, and critical project risks. The assessment forms part of the Information Memorandum (IM) and CIRP costs.
- Protection of Unsubmitted Allottee Claims: Under substituted Regulation 36(2)(ja)(xi), the RP is legally obligated to include in the IM all allottee details (names, amounts due, units allotted) that reflect in the corporate debtor's books of account or RERA portal records, even if those allottees failed to file a formal claim form with the RP.
- Allottee Relief Classification: The IM must classify allottees based on their preferred remedy: (a) possession of unit, (b) refund of amount, (c) execution of conveyance deed/title transfer, or (d) other reliefs, noting those who have not stated a preference.
Statutory Anchor 4: Regulations 38(4), 38A & Circular 110/2026 — Governance & Transparency Mandates
The final tier of the reform establishes post-resolution governance and on-ground project transparency:
- Monitoring Committee Composition (Regulation 38(4)(b)): Where a real estate corporate debtor resolves, the Monitoring Committee supervising plan implementation must mandatorily include: (i) the Authorised Representative (AR) of class creditors or a majority-elected allottee representative, and (ii) a representative of the concerned RERA and a representative of the local Competent Authority (such as municipal planning bodies), subject to their concurrence.
- Mandatory Resolution Plan Contents (Regulation 38A): Every resolution plan must provide project-wise breakdowns of sanctioned, built, and under-construction units, treatment of allottee claims (possession, conveyance deed, refund), and specific, phase-wise completion timelines. Most crucially under Regulation 38A(c), the plan must provide specific treatment for allottees who did not submit claims but appear in the IM.
- 7-Day Mandatory Site Signboards (Circular No. IBBI/CIRP/110/2026): Within 7 days of appointment, the IRP/RP must install conspicuous signboards at the main entrance of every real estate project and notice boards at corporate, site, and sales offices, stating the CIRP status and full contact details of the IP. The RP must also extract RERA web records to bridge accounting omissions and consult RERA on plan feasibility.
- Section 12A Withdrawal Clarification (Regulation 30A): A formal statutory clarification confirms that the RP must continue discharging full CIRP responsibilities until any Section 12A withdrawal application is formally adjudicated by the NCLT.
Comparative Analysis: Real Estate CIRP Under Old vs. Amended IBBI Framework
To assist resolution professionals, lenders, and corporate finance teams in mapping immediate workflow adjustments, the table below provides a direct operational comparison between the previous framework and the amended regulations:
| Operational Parameter | Previous CIRP Practice | New Mandate (Fifth Amendment & Circular 110) |
|---|---|---|
| Insolvency Scope & Project Ring-Fencing | Blanket insolvency across entire corporate entity; solvent projects stalled under Section 14 moratorium. | Project Exclusion under Reg 4F: CoC can vote by 66% to recommend exclusion of viable projects to NCLT. |
| Bank Account & Fund Utilisation | Common CIRP bank account frequently co-mingled project receipts and process expenses. | Mandatory Project Accounts (Reg 4D): Separate bank account per project; strict adherence to RERA 70% fund utilisation rules. |
| Pre-EOI Technical Due Diligence | Ad-hoc estimates; prospective resolution applicants bid with incomplete structural and cost data. | Reg 4G Assessment: Independent engineers/evaluators must establish cost-to-complete and milestone funding before Form G issuance. |
| Unsubmitted Homebuyer Claims | Allottees missing claim deadlines risked complete debt extinguishment under clean slate doctrine. | Mandatory Inclusion (Reg 36 & 38A): RP must reflect book/RERA allottee debts in IM; resolution plans must provide specific treatment for them. |
| Monitoring Committee Structure | Dominated entirely by institutional financial creditors and the successful applicant; allottees lacked direct oversight. | Reg 38(4)(b) Mandate: Monitoring Committee must include Allottee AR/representative, plus RERA and Competent Authority officials. |
| On-Ground Stakeholder Disclosure | Notices restricted to IBBI website and newspapers; walk-in buyers and site visitors remained unaware. | Circular 110 Mandate: Conspicuous signboards at project entrances and site/sales offices within 7 days of appointment. |
5-Point Actionable Execution Checklist for RPs, CoC Members & Advisors
To ensure regulatory compliance and prevent procedural litigation before NCLT benches, insolvency professionals and corporate advisors should execute the following 5-point protocol immediately upon admission:
Pursuant to Circular No. IBBI/CIRP/110/2026, erect clear, weather-resistant signboards at the primary entrance of every real estate project site and notice boards across registered, corporate, and sales offices stating that the corporate debtor is under CIRP, displaying the IRP/RP's full contact details.
Under Regulation 4D, immediately open separate scheduled bank accounts for each discrete project. Implement strict fund routing ensuring that all homebuyer receivables comply with RERA Section 4(2)(l)(D). Use an automated bank statement converter to audit historical inward flows and reconstruct project-specific ledger balances.
Compile project-wise tables under Regulation 4F(1) detailing RERA IDs, completion stages, sold/unsold counts, and occupancy certificates. Where a project is commercially viable or near completion, place a resolution before financial creditors to seek a 66% vote for project exclusion before the NCLT.
Engage independent architects, structural engineers, and quantity surveyors under Regulation 4G prior to publishing Form G. Determine the exact capital required for project delivery, milestone-wise funding, and delivery schedules to embed into the Information Memorandum.
Synchronize accounting ledgers with RERA web records to list allottees who did not submit claims into the IM under Regulation 36(2)(ja)(xi). During plan vetting, mandate compliance with Regulation 38A and invite RERA and municipal authorities to join the Monitoring Committee under Regulation 38(4)(b).
Practical Audit & Compliance Implications for CA Practitioners
For Chartered Accountants acting as statutory auditors, forensic investigators, or transaction advisors, the Fifth Amendment introduces substantial operational intersections:
- Statutory Financial Audit & Turnover Verification: Auditors evaluating real estate developers under CIRP must carefully verify whether project exclusions have been sanctioned by the NCLT. If a project is excluded, its revenues, escrow collections, and construction costs must be segregated from the corporate debtor's ongoing insolvency accounts. Verify statutory turnover thresholds and reporting obligations using the tax audit applicability u/s 44AB tool.
- Contractor Billing & ITC Verification: Ongoing construction under RP supervision requires strict Input Tax Credit reconciliation. The RP must ensure that GST charged by contractors on work packages aligns with actual physical progress verified under Regulation 4G. Use GSTR-2B reconciliation to ensure ITC claimed on steel, cement, and construction services is fully supported by vendor e-invoices and e-way bills.
- Document & Drawing Management: Real estate CIRP involves thousands of architectural blueprints, sanction plans, valuation reports under Regulation 35(3), and NCLT petition compilations. Professionals should utilize a client-side compress PDF utility to optimize file sizes within NCLT portal (e-filing) and email transmission limits without compromising resolution.