Safeguards for project-wise insolvency in real estate on the cards

The MCA said such projects will be recognised as distinct from the larger entity for the limited purpose of resolution

Concerned about the possible misuse of its proposal to allow project-based insolvency resolution for real estate companies, the Ministry of Corporate Affairs (MCA) is trying to work out certain “speed breakers” to ensure there are checks and balances in the law, government sources said.  

The ministry in its consultation paper on Insolvency and Bankruptcy Code (IBC) amendments had proposed that “when an application is filed to initiate the corporate insolvency resolution process (CIRP) in respect of a corporate debtor who is the promoter of a real estate project, and the default pertains to one or more of its real estate projects,