IBBI issues RERA compliance rules for corporate debtors with real estate projects

Traders Union
All News
Regulators
IBBI RERA Rules for Real Estate

Highlights

IBBI has made RERA compliance and the use of digital records mandatory for resolution professionals handling CIRP for corporate debtors with real estate projects.
Resolution professionals can now seek written opinions from RERA on the regulatory compliance, feasibility and implementation of resolution plans; any opinion provided must be shared with the Committee of Creditors and applicants.
The IRP or RP must put up signboards disclosing CIRP at project sites and offices within seven days, supporting transparency and the timely submission of claims.

This article was translated from the original. Read the original version by our correspondent here.

New compliance framework for RERA records and disclosures

According to the Insolvency and Bankruptcy Board of India, when a corporate debtor has one or more real estate projects, the interim resolution professional or resolution professional handling its CIRP must ensure compliance with the RERA Act, 2016, and the rules and regulations made under it. The circular has been issued under Section 196 and aims to make the use of regulatory information available during the resolution process more systematic.

The Board said that information such as project registration, approved plans, project configuration, statutory approvals, the status of separate bank accounts and construction progress is available on the relevant RERA web portal, while this information is often incomplete, unavailable or inconsistent in the corporate debtor's records. The resolution professional can therefore use it to prepare the information memorandum, verify claims and assess the status of the project.

Under the circular, the resolution professional may also seek a written opinion from the relevant RERA on the regulatory compliance, feasibility and implementation of resolution plans under consideration by the Committee of Creditors. Any such opinion, if provided, must be placed before the Committee of Creditors and made available to prospective resolution applicants.

In addition, within seven days of their appointment, the IRP or RP must put up a clear signboard at the main entrance or another prominent location at every real estate project site. Notice boards must also be displayed at the registered office, corporate office, site offices, sales offices and other offices accessible to stakeholders. These must state that the corporate debtor is undergoing CIRP and provide the name and contact details of the IRP or RP. The boards must remain in place until CIRP ends and be updated immediately if any details change.

Impact on the resolution process and the real estate sector

This circular is particularly important in cases where records related to real estate projects are scattered or the company does not have complete documentation. Using RERA's digital records as an important source of information can help resolution professionals prepare more complete information memoranda, making it easier for prospective applicants to formulate viable resolution plans.

IBBI also emphasized that prominent disclosures about CIRP at project sites and offices will help ensure stakeholders are informed in a timely manner. This is expected to support the timely submission of claims, preserve asset value and enhance transparency throughout the process, especially in real estate cases involving large numbers of buyers, contractors and other parties.

Our previous report discussed Ozone Homes Private Limited being classified as “issuer non-cooperating” after insufficient information was shared for the rating review. The article explained that a lack of information and transparency limits the assessment of a credit profile and could negatively affect the ability to raise funding from banks and lenders. It also highlighted the potential for increased risks to investors and other stakeholders, as well as pressure on project progress and timelines.

This material may contain third-party opinions, none of the data and information on this webpage constitutes investment advice according to our Disclaimer. While we adhere to strict Editorial Integrity, this post may contain references to products from our partners.