India’s insolvency framework has helped more than 1.4 lakh homebuyers move closer to possession or receive homes from stalled real estate projects, as financially stronger developers step in to revive distressed developments. The process has brought fresh capital and new execution capabilities into projects that had remained stuck for years.
However, a large number of buyers remain caught in unresolved insolvency proceedings. Nearly 2.5 lakh homebuyers are associated with 553 real estate insolvency cases admitted under the Insolvency and Bankruptcy Code (IBC), with around 17% of the cases having been successfully resolved. About 1.1 lakh homebuyers across 221 cases are still awaiting resolution.
More stalled projects move towards completion
Homebuyers were recognised as financial creditors under the IBC in 2018, giving them a formal position in insolvency proceedings involving developers. Since then, the framework has become an important route for addressing projects where construction has stopped because of financial stress.
Projects resolved through the insolvency process represent investments of around Rs. 84,000 crore, while another Rs. 65,000 crore remains tied up in developments that are yet to be resolved.
The revival process has increasingly involved established developers taking over distressed projects and bringing in the capital required to restart construction. For buyers, the outcome can mean a return to construction and, eventually, possession instead of a project remaining stuck in prolonged financial and legal disputes.
Developers step in with fresh capital
Take Ten BKC in Mumbai’s Bandra-Kurla Complex is one example of how such resolutions are being implemented. The luxury residential redevelopment project had stalled in 2020 after its original developers faced financial difficulties.
Following the insolvency resolution process, Adani Realty acquired the project and committed more than Rs. 1,000 crore towards its completion, including over Rs. 400 crore in fresh capital. It also secured nearly Rs. 1,200 crore in construction financing. The project has since delivered completed homes to 903 buyers.
Another project in BKC, the Bharat Nagar Slum Rehabilitation Project, was taken over following the collapse of its original developer. Construction has since resumed, with rehabilitation housing being developed for nearly 1,000 families. The project had faced negative cash flows, unpaid statutory dues and pending transit-rent obligations before the takeover.
Gurugram projects also see buyer handovers
The impact of insolvency-led revival is also visible in Gurugram. The Hills-77 project was revived through the resolution process, allowing 724 homebuyers to receive possession.
The Centre Court project, which had claims of around Rs. 1,250 crore, was also acquired through a resolution process. It subsequently secured an occupancy certificate, benefiting more than 300 homebuyers following the default of its original developer.
The projects show how insolvency resolutions can bring new developers and capital into developments that had remained stalled.
Real estate insolvency faces a longer road
Despite the progress, real estate insolvency remains slower and more complicated than resolution in many other sectors. Projects often involve several groups of creditors, landowners and homebuyers, while construction can require substantial funding before any returns are generated.
Litigation and appeals can further delay implementation after a resolution plan has been approved. New developers may also have to complete homes at prices agreed five or 10 years earlier, while construction, labour and financing costs have increased since then.
The insolvency regulator has therefore proposed a more project-focused approach for real estate cases. Its recommendations include project-wise insolvency proceedings, ring-fencing project cash flows, simpler claims processes and closer coordination between insolvency authorities and RERA. The broader objective is to prioritise completion of housing projects over liquidation.
With more than a lakh homebuyers still waiting for resolution, the next challenge will be to make these processes faster while ensuring that viable housing projects can continue towards completion.
