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The Insolvency and Bankruptcy Code (Amendment) Act, 2026, passed by the Lok Sabha on 31 March 2026 and given Presidential assent earlier this month, is the most consequential rewrite of India’s insolvency framework since the Code’s enactment in 2016. For the real estate sector, the Act reframes the operational architecture of insolvency more decisively than for any other industry. Project-wise CIRP, until now a judicial workaround pioneered in Flat Buyers Association Winter Hills-77 v. Umang Realtech, becomes a codified statutory pathway. Section 53, the liquidation waterfall, is recalibrated to clarify the meaning of secured creditor status. Group insolvency, cross-border cooperation, and Section 28A asset-pooling mechanisms supply the structural toolkit for the multi-SPV, multi-lender, multi-project arrangements that define the Indian real estate market. Against the backdrop of the Insolvency and Bankruptcy Board of India’s April 2026 report estimating that 553 admitted real estate cases affect approximately 2,49,087 homebuyers, the Act’s real estate provisions are the new operating template against which every project structure, financing covenant, and default response must now be measured.
Key Takeaways
- The IBC Amendment Act 2026 codifies project-wise CIRP for real estate developers, formalising the ring-fencing approach previously developed by the NCLAT in Umang Realtech and confirmed by the Supreme Court in Mansi Brar.
- Section 53 of the IBC is recalibrated: a creditor will be a secured creditor only to the extent of the value of security relinquished to the liquidation estate, and inter-se priority arrangements between creditors at the same priority level are statutorily recognised.
- The IBBI April 2026 report identifies 553 admitted real estate insolvency cases affecting approximately 2,49,087 homebuyers, with 95 cases resolved and 221 ongoing.
- Section 28A permits creditors who hold security over guarantor assets to consolidate those assets into the corporate debtor’s CIRP with Committee of Creditors approval, fundamentally altering how lenders structure security packages over related entities.
- Real estate developers, lenders, and homebuyers face distinct action items under the new architecture, ranging from project-level escrow reconfiguration to documentation of inter-creditor priorities to Authorised Representative voting strategy.
Where the Real Estate Insolvency Framework Stands
Real estate insolvency under the IBC has evolved through four phases. The first phase, from 2016 to 2018, treated homebuyers as ordinary creditors with no formal classification, leading to the Pioneer Urban Land and Infrastructure v. Union of India litigation. The second phase, beginning with the Insolvency and Bankruptcy Code (Second Amendment) Act, 2018, recognised allottees under real estate projects as financial creditors and gave them voting rights through Authorised Representatives. The Supreme Court upheld this classification in Pioneer Urban on the reasoning that homebuyer advances function as project finance and reflect the time value of money. The third phase, from 2020 onwards, introduced the threshold under Section 7 of the IBC requiring at least 100 allottees of the same real estate project, or 10 per cent of the total allottees of that project, to file an insolvency application.
The fourth phase, commencing with the IBC Amendment Act 2026, completes the architectural shift by codifying project-wise CIRP. The shift had been pre-staged by IBBI’s amendments to the CIRP Regulations on 15 February 2024, which required Resolution Professionals to operate separate bank accounts for each real estate project of the corporate debtor and empowered the Committee of Creditors to direct project-specific resolution plans. The Act now elevates these procedural innovations into a legislative mandate.
The numbers explain the urgency. The IBBI’s April 2026 sectoral report records 553 admitted real estate cases under the IBC. Of these, 95 cases have been resolved and 221 are ongoing. Together they affect approximately 2,49,087 homebuyers, translating into housing insecurity for close to a million individuals when household size is factored in. In the first half of fiscal year 2026, 105 resolution plans were approved, down from 124 in the corresponding period of fiscal year 2025.
Project-Wise CIRP: From Umang Realtech to Codification
The structural problem the Amendment Act addresses is straightforward. Indian real estate developers typically operate multiple projects under a single corporate vehicle, each with its own approvals, financing, escrow arrangements, and homebuyer base. When a default occurs in one project, the entity-centric architecture of the IBC traditionally pulled the entire corporate debtor and all its other projects into insolvency, including viable and near-completion ones. Homebuyers in performing projects bore collateral damage from defaults in unrelated ones.
The NCLAT’s intervention in Flat Buyers Association Winter Hills-77 v. Umang Realtech Pvt. Ltd. devised what came to be called Reverse Corporate Insolvency Resolution Process. The Tribunal limited the CIRP to the specific defaulting project and excluded the developer’s other projects from the resolution net. The approach was extended in subsequent NCLAT rulings, including in matters involving Raheja Developers where the appellate tribunal confined CIRPs to single projects such as the Krishna Housing Scheme and Raheja Shilas. The Supreme Court endorsed the direction in Mansi Brar, observing that real estate insolvency should as a rule proceed on a project-specific basis. IBBI’s 15 February 2024 amendment to the CIRP Regulations operationalised the approach by mandating project-specific bank accounts and project-specific resolution plans subject to Committee of Creditors approval.
The IBC Amendment Act 2026 converts this judicial and regulatory development into a statutory pathway. The substantive consequences are several. The defaulting project is identified and ring-fenced at the admission stage. The resolution plan is invited and adjudicated for that project alone. Resolution applicants can submit project-specific bids without committing to the developer’s entire portfolio. Cash flows, escrow accounts, and stakeholder claims are confined to the project under resolution. The Committee of Creditors composition is calibrated to reflect the financial creditors of that project, with homebuyer-allottees of that project voting through Authorised Representatives.
The codification resolves the legal questions that had been flagged at the level of pure regulatory instruments. Where the corporate debtor is a single juristic entity, and IBC was historically designed to address insolvency at the entity level, the Act now provides legislative warrant for project-level proceedings within that single entity. The single-entity test, in other words, is now expressly subordinated to the project-test for real estate corporate debtors.
Section 53 Waterfall: Secured Creditor Status Recalibrated
The second consequential area for real estate insolvency is the recalibration of Section 53, the liquidation waterfall. Two amendments matter.
The first is that the Act provides that a creditor will be a secured creditor only to the extent of the value of the security relinquished to the liquidation estate. The amendment responds to the persistent interpretive tension over the phrase “due owed to a secured creditor” in Section 53(1)(b)(ii), where creditors with security covering only part of the debt sometimes claimed secured status for the entire debt. After the amendment, the secured-creditor priority attaches only up to the relinquished security’s value, and the balance of the debt drops to the unsecured tier. For real estate insolvencies, where lenders typically take security over project-specific assets that may not cover the full debt, the change tightens the hierarchy.
The second is that the Act adds an illustration to Section 53(2) clarifying that inter-se priority arrangements between creditors at the same level of priority are valid and will not be disregarded by the liquidator. The illustration uses two creditors with a contractual arrangement that one’s debt shall be cleared before the other; the amendment confirms that such an arrangement will be honoured. For real estate projects financed through layered first-charge and second-charge lenders, or through senior and subordinated tranches, the codification of inter-se priority is significant. It removes the previous uncertainty about whether intra-class subordination agreements would survive liquidation.
The combined effect of these amendments sharpens the waterfall. Government claims based on tax liens or charges arising by operation of law no longer automatically displace homebuyers and contractually secured creditors. The hierarchy now more closely tracks the commercial bargain that real estate financing was structured around.
Section 28A: Guarantor Asset Consolidation
The Act inserts Section 28A, which permits a creditor that holds security over a guarantor’s asset and has taken possession under SARFAESI or any other law to transfer that asset as part of the corporate debtor’s CIRP, with Committee of Creditors approval. Where the guarantor is itself in insolvency or bankruptcy, the guarantor’s own creditors must also approve.
For real estate insolvencies, the implications are material. Promoter-backed developers typically structure financing with personal guarantees and corporate guarantees from group entities. Before the amendment, lenders who had enforced security over guarantor assets under SARFAESI managed those assets in parallel proceedings disconnected from the main CIRP. The asset pool available to a resolution applicant was therefore narrower than the economic reality of the developer’s group structure suggested. Section 28A allows consolidation of the asset pool, potentially improving resolution plan economics for the corporate debtor’s CIRP, while preventing double recovery through a structured proceeds waterfall under which proceeds first settle the guarantor’s secured creditor claims, with any surplus accruing to the corporate debtor’s resolution.
The Act simultaneously narrows a structural abuse that had become well documented in the personal guarantor space. Promoters who were personal guarantors to corporate debtors had increasingly initiated personal insolvency proceedings primarily to obtain the benefit of the interim moratorium under Sections 96 and 124, stalling creditor recovery actions against personal assets while the corporate CIRP continued. The Act removes the availability of an interim moratorium where insolvency or bankruptcy proceedings for a personal guarantor to a corporate debtor are initiated by either the creditor or the debtor. Combined with a new mandatory creditors’ meeting requirement for repayment plans in personal guarantor cases, the amendment closes the strategic delay channel.
The Homebuyer Voting Architecture and Authorised Representatives
The Act preserves the Authorised Representative architecture for homebuyers introduced by the 2018 Amendment but operates it within a project-wise framework. Under the existing mechanism, allottees in a real estate project elect an Authorised Representative who attends Committee of Creditors meetings and votes on the basis of consolidated allottee instructions. The vote is cast as a class vote based on the majority preference of the represented allottees, which has the effect of converting many small individual creditors into a single voting bloc proportionate to their aggregated financial creditor position.
Within a project-wise CIRP, the architecture sharpens. The class of allottees is confined to the project under resolution rather than spanning the developer’s full portfolio. The voting bloc therefore reflects the homebuyers most directly affected by the resolution outcome of that project. The IBBI’s April 2026 sectoral report flagged Authorised Representatives as functioning at times as passive intermediaries rather than active advocates, and recommended structural reforms to strengthen their advisory and decision-support function. Practitioners advising allottee groups will need to consider whether to invest in independent legal and financial counsel for the AR, particularly where the resolution plan involves trade-offs between possession timelines and economic recoveries.
The Section 7 threshold for homebuyer-initiated CIRP, which requires at least 100 allottees of the same project or 10 per cent of total allottees of that project, continues to operate. The threshold was tightened in 2020 specifically to prevent speculative homebuyers from triggering insolvency proceedings. The IBBI’s April 2026 report has separately flagged the genuine-versus-speculative homebuyer distinction as an area requiring further regulatory clarity.
The RERA Interface
The IBC Amendment Act 2026 does not formally amend the Real Estate (Regulation and Development) Act, 2016, but its project-wise CIRP architecture aligns closely with RERA’s project-specific framework. Each registered project under RERA already has its own escrow account, completion timeline, disclosure obligations, and consumer-grievance forum. The Act’s codification of project-wise CIRP brings the IBC framework into structural alignment with RERA’s operating logic.
The interface raises three practical questions. The first is jurisdictional. RERA Authorities have been exercising consumer-protection-style adjudicatory powers over allottee complaints, while the NCLT exercises insolvency jurisdiction. After admission of a project-wise CIRP, the moratorium under Section 14 of the IBC will continue to suspend RERA proceedings for that project, but pre-admission RERA orders may continue to be enforceable subject to the general moratorium framework.
The second is escrow management. RERA mandates that 70 per cent of allottee receipts be parked in a project-specific escrow account. The IBBI’s February 2024 CIRP Regulations amendment requires the Resolution Professional to operate a separate bank account for each project. The two requirements converge but raise operational questions about whether RERA escrow can be used to fund construction during CIRP without specific orders.
The third is the resolution plan content. Project-wise resolution plans now need to satisfy RERA disclosure obligations, demonstrate compliance with completion timelines once approved, and address how the existing RERA registration will be carried over to the resolution applicant. Resolution applicants are likely to seek pre-bid clarity from the Adjudicating Authority on RERA continuation.
What Real Estate Developers Must Reset Now
For developers, the Amendment Act creates a new operational reality across four dimensions.
The first dimension is project structuring. Developers should expect insolvency to be evaluated on a project-by-project basis. Project records, financial statements, and accounts should be maintained at project-level rather than aggregated at entity level. Industry committee reports have flagged that the current absence of project-wise financial record-keeping is a material obstacle to clean project-wise CIRP. Internal management reporting infrastructure should be reorganised accordingly.
The second dimension is escrow architecture. RERA-mandated project escrows should be designed with explicit provisions for use during a CIRP scenario, including defined permitted uses for construction completion. Documentation should anticipate Section 14 moratorium implications and the Resolution Professional’s authority over the escrow.
The third dimension is corporate guarantee design. The new Section 28A mechanism allows lenders to consolidate guarantor assets into the corporate debtor’s CIRP. Group-company guarantees and intercompany guarantees should be reviewed for the asset-pooling implications. Where the developer’s promoter has provided personal guarantees, the Act’s narrowing of the personal-guarantor moratorium changes the timing dynamics of any restructuring conversation.
The fourth dimension is documentation of approvals and dissent. Resolution Professionals will conduct avoidance investigations under the extended look-back window of two years from the filing date for preference, undervalued and extortionate transactions. Internal documentation of board approvals, valuation reports, and arms-length pricing for related-party transactions should be reviewed. The Act also allows creditors to challenge avoidance transactions if the RP fails to do so, expanding the pool of potential challengers and the range of transactions subject to scrutiny.
What Real Estate Lenders Must Reset Now
For lenders, the principal action items relate to security documentation, inter-creditor arrangements, and personal guarantor enforcement strategy.
The Section 53 amendment narrows secured creditor priority to the extent of relinquished security value. Lenders should review existing security documentation to identify cases where loan-to-value coverage is incomplete. Where security is project-specific, the lender’s secured creditor priority will be determined by project-level asset values at liquidation rather than by the loan amount on the books. Provisioning models, recovery projections, and capital allocation should be recalibrated.
Inter-creditor arrangements are now statutorily protected. Lenders sitting at the same priority level should consider documenting inter-se priority preferences in writing. Inter-creditor agreements that establish first-loss tranches or specify subordination among consortium lenders should be drafted with the new Section 53(2) illustration in mind. The codification reduces the litigation risk that previously surrounded such arrangements at the liquidation stage.
The Section 28A mechanism for guarantor asset consolidation creates both opportunity and complexity. Lenders enforcing security over a guarantor’s assets under SARFAESI now have a procedural route to bring those assets into the corporate debtor’s CIRP, potentially improving resolution economics. Counsel should evaluate when to consolidate versus when to continue parallel SARFAESI enforcement, taking into account proceeds-waterfall implications and the timing of the corporate debtor’s CIRP.
Finally, the personal guarantor moratorium reform changes the recovery timeline against promoter assets. Where promoter guarantees were previously stalled by interim moratoriums under Sections 96 and 124, lenders can now proceed against personal assets in parallel with the corporate CIRP.
What Homebuyers and Allottees Must Know
For homebuyers and allottees, the Amendment Act offers a structurally improved framework but does not eliminate the procedural complexity that has historically frustrated retail allottees.
The good news is that project-wise CIRP confines the resolution to the project where the default occurred. Allottees in a defaulting project no longer have to worry about being lumped with allottees of healthier projects in the same developer group, and conversely, allottees in performing projects are protected from collateral damage. The Section 7 threshold of 100 allottees or 10 per cent of project allottees continues to gate filings, requiring collective action.
Allottees who cross the threshold and initiate a CIRP will need to engage actively with the Authorised Representative architecture. The IBBI report’s flagging of ARs as passive intermediaries highlights the importance of independent legal and financial advice for the allottee class. Voting decisions on resolution plans involve trade-offs between completion timelines, compensation for delays, and economic recoveries that often require sophisticated analysis.
Section 53 reforms favour allottees indirectly. The narrowing of secured creditor priority to the value of relinquished security and the clarification of inter-se priority arrangements leave a more predictable residual pool for unsecured financial creditors, which is the category in which retail allottees fall in liquidation scenarios. Where projects do reach liquidation rather than resolution, the recalibrated waterfall improves the realistic recovery position for the allottee class.
Looking Ahead: Group Insolvency and the SPV Question
The Act’s group insolvency framework remains the most analytically open chapter for the real estate sector. Indian real estate developers commonly use special purpose vehicles for individual projects, with the SPV holding the project asset and the parent or holding company guaranteeing financing, providing brand and operational support, and aggregating cash flows. Where a default occurs in an SPV, the question of whether the parent should be drawn into a coordinated insolvency proceeding has been litigated repeatedly without consistent resolution.
The Amendment Act introduces a group insolvency framework that allows multiple companies in the same corporate group to be resolved together. The framework will likely be supported by IBBI regulations specifying the procedural mechanics, the criteria for determining group affiliation, and the voting architecture for inter-company creditors. Until those regulations are notified, practitioners face uncertainty about how a project-wise CIRP at SPV level interacts with a coordinated group insolvency at parent level.
The cross-border dimension of group insolvency is also material for developers with foreign holding structures, foreign creditors, or Indian-domiciled debt instruments held by foreign investors. The Act’s cross-border insolvency provisions enable Indian courts to recognise and cooperate with foreign insolvency proceedings, which will be relevant for international real estate platforms with Indian operating subsidiaries.
The combination of project-wise CIRP within an entity, group insolvency across entities, and cross-border cooperation across jurisdictions provides the structural toolkit for resolving complex real estate financial distress. The deployment of that toolkit in actual cases will define the next phase of real estate insolvency jurisprudence.
Frequently Asked Questions
What is project-wise CIRP under the IBC Amendment Act 2026?
Project-wise CIRP is the codification of a judicial workaround that the NCLAT pioneered in Flat Buyers Association Winter Hills-77 v. Umang Realtech Pvt. Ltd. and that the Supreme Court endorsed in Mansi Brar. Under project-wise CIRP, the insolvency proceeding is confined to the specific real estate project where the default occurred, ring-fencing the developer’s other projects. The Resolution Professional operates a project-specific bank account, the Committee of Creditors comprises the financial creditors of that project, and the resolution plan addresses that project alone. The IBC Amendment Act 2026 elevates this architecture from regulatory practice to statutory mandate.
Are homebuyers financial creditors under the IBC Amendment Act 2026?
Yes. Homebuyers were classified as financial creditors by the Insolvency and Bankruptcy Code (Second Amendment) Act, 2018, on the rationale that allottee advances function as project finance and reflect the time value of money. The Supreme Court upheld this classification in Pioneer Urban Land and Infrastructure v. Union of India. The IBC Amendment Act 2026 retains this classification and operates the homebuyer financial creditor architecture within the project-wise CIRP framework.
What is the threshold for homebuyers to file a CIRP application against a real estate developer?
Under Section 7 of the IBC, as amended in 2020, at least 100 allottees of the same real estate project, or 10 per cent of the total allottees of that project, whichever is less, must jointly file a CIRP application. The threshold is project-specific rather than developer-wide, which aligns with the project-wise CIRP architecture codified by the Amendment Act 2026.
How does the Section 53 waterfall change under the IBC Amendment Act 2026?
The Amendment Act recalibrates Section 53 in two principal ways. First, a creditor is treated as a secured creditor only to the extent of the value of the security relinquished to the liquidation estate, rather than for the full amount of the debt. Second, an illustration is added to Section 53(2) clarifying that inter-se priority arrangements between creditors at the same priority level are valid and must be honoured by the liquidator. These reforms tighten the priority hierarchy and protect contractual subordination arrangements.
What is Section 28A under the IBC Amendment Act 2026?
Section 28A permits a creditor that holds security over a guarantor’s asset, and has taken possession under SARFAESI or any other law, to transfer that asset as part of the corporate debtor’s CIRP with Committee of Creditors approval. Where the guarantor is itself in insolvency or bankruptcy, the guarantor’s own creditors must also approve. The provision allows consolidation of the asset pool available for the corporate debtor’s resolution while preventing double recovery through a structured proceeds waterfall.
Does the IBC Amendment Act 2026 affect the relationship between IBC and RERA?
The Amendment Act does not formally amend the Real Estate (Regulation and Development) Act, 2016. However, the project-wise CIRP architecture aligns structurally with RERA’s project-specific framework. Once project-wise CIRP is admitted, the moratorium under Section 14 of the IBC suspends RERA proceedings for that project. RERA escrow account requirements continue to apply, and resolution plans need to address RERA registration continuation and completion timelines.
When did the IBC Amendment Act 2026 come into force?
The Insolvency and Bankruptcy Code (Amendment) Act, 2026 was passed by the Lok Sabha on 31 March 2026 and received Presidential assent in early April 2026. Substantive provisions are being notified in stages, and IBBI is expected to issue supporting regulations covering the detailed procedural mechanics for project-wise CIRP, group insolvency, and cross-border cooperation.
This analysis was prepared by the Candour Legal team. Candour Legal is a full-service Indian law firm with offices in Ahmedabad, Mumbai and New Delhi, advising on insolvency, real estate, banking, and corporate restructuring. The firm publishes analytical commentary on developments in Indian law at candourlegal.com.
Further reading on Candour Legal
- IBBI’s CIIRP Framework: An Out-of-Court Insolvency Track for India — companion analysis on the creditor-initiated resolution track of the same Amendment Act, with the procedural architecture and use-case mapping for stressed corporates.
- Key Amendments to the Insolvency and Bankruptcy Code (IBC), 2025 — precursor analysis on the 2025 amendment cycle that set the stage for the 2026 architectural rewrite.
- The Real Estate Regulation Act (RERA) — the project-level regulatory framework that interfaces with the project-wise CIRP architecture discussed in this article.
