Hope for homebuyers stuck with bankrupt developers

IBBI's amended regulation allows the hand-over of property to owners before debt resolution

- Gireesh Chandra Prasad

Indian buyers who wait for their homes for years when a developer goes bankrupt have a reason to hope: they can now get their properties even as the case winds through courts.

The Insolvency and Bankruptcy Board of India (IBBI) has amended its regulations, allowing administrators of bankrupt real estate companies to hand over plots, apartments or buildings to owners even while the debt resolution process is still on.

Owners, however, must have met the terms of their purchase contract and will need two-thirds of the lenders to the insolvent builder to agree, the IBBI said on Tuesday. "Thus, the distressed homebuyers would not have to wait for long periods in order to get possession of their properties."

The bankruptcy regulator's decision will bring relief to thousands of homebuyers locked out of their properties for years after lenders initiated insolvency action against stressed projects.

As of September 2024, only 160 cases of distressed builders stood resolved out of 1,760 admitted, according to IBBI data.