This article examines a key proposal from the Insolvency and Bankruptcy Board of India’s (IBBI) 2023 Discussion Paper on real estate insolvency: the transfer of completed units to deserving homebuyers during the Corporate Insolvency Resolution Process (CIRP). While recent regulatory amendments enhanced homebuyer protection, the IBBI withheld implementing Proposal 3, which allowed property transfer by resolution professionals to allottees who fulfilled their contractual obligations. The article explores the rationale behind this proposal, the IBBI’s concerns—including voting thresholds, structural safety, and residual claims—and addresses them through a restructured regulatory framework. A “Final Proposed Amendment” is suggested, introducing phase-wise voting, structural safety checks, and full claim settlement upon possession. This proposed solution aims to reconcile stakeholders’ interests, streamline resolution, and protect homebuyers from disadvantageous liquidation outcomes. Ultimately, the article argues for adopting this reform to uphold homebuyers’ rights and promote equitable resolution in real estate insolvencies. Continue reading A Case for Transferring Property to Deserving Allottees during Real-Estate CIRP: Refurbishing IBBI’s Proposal

In this article, the authors, explore the “Creditor-Friendly” framework in India, which has met trouble halfway due to a lack of consent over the resolution plans. The two-thirds majority of the CoC that passes a resolution plan disregards the opinions of the dissenting creditors, who get outvoted, and operational creditors, who don’t have voting rights. The minority cannot challenge the commercial wisdom of the Committee but is entitled to fair and equitable distribution under Section 30(2) of the IBC, 2016. Section 30(2) confirms that the operational and the dissenting creditors receive value equivalent to the payment received in the event of liquidation or order of priority. However, its application is shrouded in the mist of confusion regarding the extent of proceeds payable, lowering the success rate of resolution processes. To salvage the creditor-centric resolution process pursued in India, the “cross-class cram down” mechanism may be a relief. An important part of the US insolvency framework, this mechanism has also gained momentum in the UK. It is a bridge binding the dissenting creditors to the resolution plan approved by the Committee of Creditors. In return, it ensures that the minority is not worse off than the “relevant alternative”. Although Section 30(2) attempts to plant this concept, it has not yet been able to bear the fruits. This article sifts through the application of this concept in different jurisdictions to solve the ambiguities in the Indian Insolvency framework. Continue reading From Right to Dissent to Success of the Resolution Process: Reinforcing Cramdown With Fairness and Equitability

The Indian Insolvency and Bankruptcy Code, has faced persistent challenges, including prolonged resolution timelines and inequitable treatment of creditors. This article explores the potential of integrating mediation into the existing insolvency framework as a means to address these issues. By employing game theory as an analytical tool, the study examines the strategic interactions among the key players in insolvency proceedings, including creditors, debtors, and regulatory bodies. The game-theoretic analysis reveals that the insolvency game is characterised by coordination problems, information asymmetries, and heterogeneous interests among stakeholders. These factors often lead to suboptimal outcomes, where the Nash equilibrium may not align with the Kaldor-Hicks efficient solution. The article argues that the introduction of mediation can transform the insolvency game into a more cooperative endeavour, fostering mutually beneficial agreements and preserving overall economic value. Through a graphical representation of the game, the study demonstrates how mediation can expand the feasible set of outcomes, guiding the players towards a Nash equilibrium that is closer to the Pareto frontier. The flexibility of mediation allows for creative solutions that may not be available through formal legal processes, potentially leading to faster resolutions and higher recovery rates for all stakeholders. By leveraging the insights from game theory, this article provides a compelling case for policymakers to consider the integration of mediation into the Indian insolvency regime, as a means to enhance the efficiency and equity of the corporate debt resolution landscape. Continue reading Mediating the Game of Insolvency: Unlocking Efficiency and Equity in India’s Bankruptcy Landscape