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To ensure fairness, transparency and equal treatment of all genuine home buyers, IBBI has proposed two targeted measures under the Corporate Insolvency Resolution Process (CIRP), wherein the resolution professional (RP) will include the details of all assigned parties, regardless of whether such assigned parties have filed claims; and the resolution plan that provides for fair treatment of such assigned parties.
Discussion piece
IBBI in its Discussion Paper on “Strengthening Safeguards and Transparency in the CIRP” noted that under the existing framework, only those claims formally filed by creditors are included in the Information Memorandum (IM) and considered in the resolution plan.
In many cases of real estate insolvency, several assigned parties, whose details are duly reflected in the corporate debtor’s accounts, do not file claims within the prescribed period. Accordingly, such assigned parties are excluded from both the IM and the resolution plan.
The exclusion of such assigned parties also creates practical difficulties at the plan implementation stage, when homebuyers who fail to declare subsequently approach the settlement professional or the successful settlement applicant to seek inclusion, resulting in uncertainty, delay and avoidable litigation.
“The right to shelter has been considered a fundamental right even by the Supreme Court. IBBI’s discussion paper focuses on the financial inclusion and consideration of all claims of housing allottees in the resolution plan, reaffirming the principle of equality and fair treatment,” said Hari Hara Mishra, CEO of the Association of ARCs in India.
IBBI, while proposing the above measures, has taken into account the observations of the National Company Law Appellate Tribunal (NCLAT) in the case of Puneet Kaur vs. KV Developers Private Ltd & Others.
The NCLAT said: “…we are of the view that the claim of those home buyers, who could not file their claims, but whose claims were included in the file of the corporate debtor, should have been included in the Information Memorandum and the resolution applicant should have taken cognizance of the said liabilities and dealt with them appropriately in the resolution plan.
“Failure to consider such claims, as evidenced by the record, results in an inequitable and unfair resolution, as evidenced in the present case.”
Record the reasons for liquidation
In another important proposal, IBBI’s discussion paper proposes that the creditors’ committee (CoC) should mandatorily record the reasons for recommending a liquidation.
The above-mentioned Board proposal has come across certain CIRP cases, wherein the CoC has recommended liquidation despite receipt of compliant and viable resolution plans, which sometimes have even greater value than the liquidation value of the corporate debtor’s assets.
“In many such cases, minutes of CoC meetings do not record the reason for recommending liquidation. Regulation 40D currently provides that the CoC may record considerations for liquidation, but does not make this mandatory,” the discussion paper said.
Thus, the IBBI said, in cases where a compliant resolution plan worth more than the liquidation value was received, the reasons for the recommendation for liquidation of the corporate debtor will be recorded and submitted in the liquidation application filed by the resolution professional with the Adjudicating Authority.
Mishra noted that the overarching objective of the Insolvency and Bankruptcy Code (IBC) is to revive stressed assets wherever possible.
He emphasized that keeping this in mind, the proposed mandatory recording of reasons, if an asset is liquidated despite the availability of a resolution plan amounting to over-liquidation, is certainly a welcome measure.
Published on November 18, 2025
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