The Indian government has decided to decouple crucial real estate-focused insolvency reforms from the upcoming set of amendments to the Insolvency and Bankruptcy Code (IBC). According to officials familiar with the matter, the immediate legislative push will focus on corporate insolvency changes, while structural reforms aimed at protecting homebuyers and resolving stalled housing projects will be taken up in a separate, later process.
Corporate Amendments Take Priority
The Ministry of Corporate Affairs is prioritizing amendments that are already in an advanced legislative stage. The IBC (Amendments) Bill, 2025 is currently under review by a Lok Sabha select committee headed by BJP MP Baijayant Panda. This Bill proposes a creditor-led, largely out-of-court insolvency process for quicker corporate turnaround. It also includes provisions for faster tribunal admissions, a new framework for group and cross-border bankruptcies, and separate mechanisms to resolve implementation disputes.
Officials stated that considerable deliberations on these corporate-focused changes have already occurred within the government. The Bill will not be held back to incorporate the real estate measures, which require further expert and inter-ministerial consultations. "Chances of the revised IBC (Amendments) Bill making it to either this (Winter) session or the budget session are fifty-fifty," one official said, requesting anonymity.
Real Estate Reforms Await Separate Consultation
The decision means that long-awaited structural reforms for the real estate sector, a major stress point in India's insolvency ecosystem, will be delayed. These reforms were expected to address the persistent delays and low recovery rates commonly seen in realty bankruptcies.
The proposed real estate fixes, which will be developed separately, include:
- Introducing project-specific insolvency resolution.
- Creating stronger safeguards for homebuyers' investments.
- Enabling the SWAMIH stress fund to complete projects under the IBC framework.
- Mandating early project registration with local authorities.
These deliberations involve the corporate affairs ministry, the housing ministry, and the Insolvency and Bankruptcy Board of India (IBBI). The proposals stem from the Supreme Court's directions on 12 September in the Mansi Brar Fernandes vs. Shubha Sharma case. Two committees—one being set up by the government and another under the IBBI—will finalize the recommendations for a later round of IBC amendments.
Investor Confidence and the Evolving IBC Framework
Despite the delay in sector-specific reforms, experts note that the IBC has already significantly strengthened India's distressed-asset market. Amit Maheshwari, Tax Partner at AKM Global, highlighted the progress, stating, "India's distressed-asset market has become significantly more investor-friendly in recent years."
He credited a more mature IBC framework, greater participation from asset reconstruction companies and alternative investment funds, and enhanced transparency for strengthening investor confidence. Maheshwari added that the IBC has evolved with streamlined admission norms, stronger creditor rights, and clearer claim rankings, giving investors better visibility of timelines and recovery pathways.
The rollout of a simplified pre-packaged insolvency framework for MSMEs in 2020 has also paved the way for quicker revival of smaller stressed businesses. For real estate, future reforms are expected to reduce execution risk, preserve asset value, and enable structured acquisitions, making distressed-asset investment more feasible for long-term capital.
Experts believe that further measures, such as strict enforcement of resolution timelines, expansion of National Company Law Tribunal (NCLT) capacity, and dedicated sector-specific schemes, will continue to refine the IBC regime. Queries sent to the ministries of corporate affairs and housing, and the IBBI remained unanswered at the time of reporting.
