The proposed amendments to India’s Insolvency and Bankruptcy Code (IBC) offer some promise for improving recovery rates and accelerating resolution timelines, yet experts caution that real estate and construction, a sector heavily represented in ongoing insolvency cases, remains largely unaddressed. Credit rating agency ICRA highlighted that while the changes may streamline corporate insolvency for many industries, structural challenges within real estate continue to hinder effective resolution.
“Real estate and construction remain the second-largest contributors to ongoing corporate insolvency cases. Sector-specific reforms have not been incorporated, limiting the benefits of the current proposals,” said a senior analyst at ICRA. The agency emphasised that addressing stalled housing projects and protecting homebuyers has been a government priority for years, underlining the need for tailored measures. Since its enactment nine years ago, the IBC has facilitated recoveries amounting to approximately Rs 4 lakh crore, outperforming traditional recovery mechanisms. Yet, lenders continue to face substantial haircuts, with average recoveries from successful resolution plans hovering around 32% of admitted claims as of September 2025. Extended timelines remain a critical concern; nearly 75% of ongoing CIRP cases exceed 270 days post-admission, surpassing the statutory limit and straining the National Company Law Tribunal (NCLT) system. Manushree Saggar, Senior Vice President at ICRA, observed, “The SCLB recommendations could improve recovery rates and reduce resolution timelines, but delays at NCLT remain a major bottleneck.” With over 30,000 cases pending at the NCLT as of March 2025, clearing the backlog at current capacity could take more than a decade.
Key proposed reforms, including group insolvency, cross-border proceedings, creditor-initiated insolvency, and multiple or asset-specific resolution plans, are expected to provide better outcomes for companies with diversified operations. Strengthening institutional capacity at NCLT and NCLAT is seen as essential for translating policy amendments into tangible results. Industry experts note that while the IBC continues to strengthen India’s corporate insolvency framework, real estate requires bespoke interventions. “Without reforms that directly address project delays, homebuyer protection, and valuation complexities, the sector’s contribution to CIRP cases will remain problematic,” an urban finance expert said.
Looking ahead, successful implementation of the amendments will depend on procedural efficiency and sector-specific provisions, particularly for large-scale residential and construction projects. Observers believe that streamlining judicial processes, alongside the adoption of the proposed reforms, could gradually improve recoveries, shorten resolution timelines, and enhance investor confidence across sectors, contributing to more sustainable urban development.
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