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India's real estate sector on a reported basis accounted for more than 50 per cent of the total realizations under Insolvency and Bankruptcy Code (IBC) 2016. However, subsequent to the release of data by the Insolvency and Bankruptcy Board of India (IBBI), a large key case went sub-judice following the admission of an appeal before the NCLAT resulting in real estate sector accounting for 18.8% of total realizations under IBC.
This compares very well to total realizations of 1.2% in the period between its inception in FY17 to September 2022, finds a joint report by property consultants ANAROCK and leading law firm, Khaitan & Co.
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"The total number of corporate insolvency resolution process (“CIRP”) cases filed has risen from an average of 208 in FY22 to an average of 313 in FY23. FY24 however has commenced on a weak note with 238 cases admitted overall in the first quarter. Real estate cases have averaged about 18-20 in each quarter between October 2021 and December 2022. However, this jumped sharply in March 2023 to 44 corporate debtors being admitted into CIRP," said Shobhit Agarwal, MD & CEO, ANAROCK Capital.
With a view to further streamline the CIR process, the Ministry of Corporate Affairs has invited comments on changes being considered to the IBC. The report covers the several key changes that are being considered. Significantly, these also include the increased use of technology in the IBC eco-system to make it more efficient and effective.
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Currently, the MCA, the Adjudicating Authority, the IBBI, information utilities and service providers operate on separate technological platforms.
"One of the key reasons for prolonged delay in resolution of insolvencies has been the large number of vacancies in the NCLTs. With a view to strengthen the bench, the government has recently appointed 21 members, which will take the bench strength closer to the sanctioned number of 63. This is expected to reduce the delays faced in the resolution of insolvent companies. However, it will be critical for the government to continue this momentum and ensure that vacancies are filled on time," said Kumar Saurabh Singh, Partner, Khaitan & Co.
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The National E-Governance Services Ltd., India’s first Information Utility, has also unveiled an insolvency case management system that assist insolvency professionals in seamlessly executing all CIRP and liquidation process-related tasks in a time-bound manner.
"A Committee constituted by Ministry of Housing and Urban Affairs recommended the project-wise CIRP of real estate companies as opposed to company-wise CIRP. Further, it was recommended that necessary amendments be made to the enabling RPs to transfer the ownership and possession of sale units to the allottees while the CIR process is underway. Finally, the report recommended creation of 5 additional fast-track benches at the NCLT, to expedite the cases including real estate cases," said Aashiesh Agarwaal, SVP - Research & Investment Advisory, ANAROCK Capital,
The report details the proposed amendments by MCA and the recommendations by MHUA, and also examines updates on several real estate companies undergoing CIRP or having completed CIRP. These include Jaypee Infratech, Unitech, Supertech, Lavasa Corporation, Amrapali, D S Kulkarni, Three C Homes, Radius Estates, and others.
Key cases pertaining to real estate under IBC
Other cases in 2020 and 2021 include: Emerald Land (1) Pvt. Ltd. Ludhiana, Punjab Jan 2020Key cases pertaining to real estate under IBC
Three C Homes Pvt. Ltd. NCR Aug 2020
KV Developers NCR Oct 2020
Unitech NCR Jan 2020
Anudan Properties Pvt. Ltd. MMR Mar 2021
HBS Seaview Pvt. Ltd. MMR Aug 2021
Radius Estates MMR Sep 2021
SARE Gurugram NCR Mar 2021
Supertech MMR Sep 2021
