Vinod Behl

Reviewing the efficacy of Insolvency and Bankruptcy Code (IBC), rating agency, ICRA has pitched for a separate framework for small-ticket insolvency cases before they reach the National Company Law Tribunal (NCLT), maintaining that such a policy move will reduce the burden on the NCLT benches and help expedite admissions for larger ticket size cases. The ICRA suggestion comes amid persistent  delays in the insolvency process, with nearly 78% of ongoing corporate insolvency resolution process (CIRP) cases having crossed the prescribed 270-day limit as  of March 2026. Also, while the implementation of the pre-packaged insolvency resolution process (PPIRP) introduced for MSMEs to ease resolution of smaller firms,has remained limited, with only 10 plans approved over the last five years.Top real estate industry professionals’ dwell on this all imprtant issue.

Ashwinder R Singh, Chairman, CII Real Estate, Co-Founder BCD Royale & Advisor, NAR India

ICRA’s suggestion for creating a separate framework for small-ticket insolvency cases before NCLT, merits consideration. While the IBC (Insolvency & Banking Code) has significantly improved financial discipline and accountability across sectors, NCLT bandwidth is increasingly being consumed by smaller cases that could potentially be resolved through a faster , specialized framework.

In real estate, the next phase of reform should focus less on admission and more on resolution – ensuring quicker project completion, protecting homebuyers and preserving asset value. The true success of insolvency in real estate is not liquidation, but delivery.

Shobhit Agarwal, CEO, Anarock Capital

The Insolvency and Bankruptcy Code has fundamentally transformed India’s real estate sector by granting homebuyers financial creditor status, enabling them to vote on resolution plans.  Anarock’s joint report with Khaitan & Company has revealed that real estate’s share in IBC recoveries had risen to 18.8% by June 2023, compared to just 1.2% in the pre-IBC era.

However, significant gaps remain. The sector needs project-level insolvency mechanisms rather than companywide proceedings, faster NCLT approval timelines and enhanced liquidity for resolution applicants. Additionally, better coordination between RERA and IBC processes, clearer priority for homebuyer claims, and standardized valuation methods will make the framework more effective for stalled real estate projects.

Ajay Sharma, Managing Director, Valuation & Advisory Services at Colliers India

IBC 2016 was amended in 2021 introducing Pre-Planned Insolvency Resolution Process (PIRP) for MSME entities where the debt threshold is 10 lakhs or more. In this the corporate debtor runs the entity while unrelated financial creditors appoint the RP to guide the process, with the Committee of Creditors approving the resolution plan within 90 days and Adjudicating Authority reviewing and approving the plan. However, PIRP did not succeed due to issues of timeline of judicial orders, lack of precedence that invite scrutinise, bankers’ preference for CIRP process and loss of relevance of Resolution Plan if time exceeds 120 days. This should have been the golden bullet to resolve many cases especially in tier 2 cities, the model has drawn low enthusiasm. In fact, under PRIP, the maximum number of cases are of real estate developers. The issue of accepting haircuts, usually a last resort in CIRP, is also seen to evoke lower enthusiasm for this model to be adopted by financial creditors.

To counter this, many experts believe that an out of court mediation phase before going to NCLT, will preserve value usually lost in prolonged litigation and also result in lower procedural requirements and cost. The new mechanism needs significant transparency where there is a level playing field for competing bids with access to information which currently is not there in PIRP.

Speed of insolvency filing and approval of prepack is critical to minimize enterprise erosion that should be strictly enforced and have judicial mechanisms to handle such cases. Further, any decision agreed by majority should be legally enforced while not entertaining any further dissenters to ensure no delays are created that leads to collapse of the enterprise. Also, it is critical to allow finance infusion mechanisms with higher priority of packback the existing loans to keep the enterprise alive and kicking, ensuring turnarounds happen at a faster rate. 

Prashant Thakur, Head, Research & Advisory, Anarock Group 

ICRA’s recommendation for a dedicated small-ticket insolvency framework is timely and much needed. Such a framework before NCLT (National Company Law Tribunal), will significantly reduce case backlogs and accelerate resolution timelines. This is especially critical for real estate where delays directly impact homebuyers, many of whom have invested their life savings in homes in stuck or delayed under-construction projects.

Smaller cases involving INR 50-100 crore can be resolved through simplified processes. This will allow NCLT to focus on more complex large-ticket cases. This dual -track approach will improve overall efficiency and restore confidence among homebuyers and investors.