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Trending: Call for Papers Volume 5 | Issue 3: International Journal of Advanced Legal Research [ISSN: 2582-7340]

REVERSE CIRP: A MASTERSTROKE OR A MISSTEP IN INSOLVENCY LAW? – Tripti Srija

Abstract:

The Indian real estate sector is currently experiencing a substantial increase in the number of corporate debtors undergoing the Corporate Insolvency Resolution Process(CIRP). This statistic underscores the need for a thorough examination of Reverse CIRP, a newly implemented mechanism designed to address the intricate challenges of real estate insolvency. As of September 30, 2023, the Insolvency and Bankruptcy Board of India (IBBI) reported[1] that 7,054 corporate debtors were accepted into CIRP, with the real estate and construction sectors accounting for 33% of these cases. This data points towards the existing crisis in the real estate industry and emphasizes the necessity of dealing with these insolvency matters through useful strategies.

This paper explores the complex field of real estate insolvency with a special emphasis on the concept of Reverse CIRP. The paper will entail a critical analysis of the legal structure regulating real estate insolvency within the Indian context. This research aims to illuminate the unique challenge that Reverse CIRP poses while it seeks to alleviate the plight of homebuyers, constantly caught up in the web of delayed projects and financial instability, by scrutiny of the provisions of the Insolvency and Bankruptcy Code in tandem with pertinent case law.

The exploration would include a close analysis of key amendments made to the IBC in 2018 and 2019, and how such amendments have gone on to affect homebuyers as well as developers. In the process, key judicial decisions that have determined the course of Reverse CIRP implementation would be brought out and assessed against the impact they have had on participants in the real estate industry, in particular, financial institutions.

This comprehensive study aims to shed light on the operational intricacies involved with Reverse CIRP and its potential implications for dispute resolution in the real estate market. This research will investigate various benefits and drawbacks of this new process while emphasizing the necessity of fair and just practices in real estate sector insolvency resolution. In conclusion, this paper seeks to improve understanding of the complexities involved with the insolvency of real estate and to provide stakeholders with the lessons learned as regards the transforming nature of ReverseCIRP, thus encouraging discourse meant to improve transparency and accountability in the industry.

Keyword: IBC, Reverse CIRP, Real Estate, Allottees, IBBI

[1] Insolvency and Bankruptcy Board of India. (2023). Discussion Paper on “Rationalization of the Regulatory Framework for Enhancing the Effectiveness of Insolvency Professional Entities in Insolvency Resolution Process.” https://ibbi.gov.in/uploads/whatsnew/cff92741c41ddc4b0a5e81d9ff4063c2.pdf