Practical Solutions for Common Challenges Faced by Resolution Professionals in Real Estate Insolvency Cases
As a Resolution Professional (RP) actively working on real estate insolvency cases under the Insolvency and Bankruptcy Code (IBC), 2016, I’ve come across a range of hurdles that are quite unique to this sector. These challenges aren’t just technical—they are emotional, legal, financial, and operational in nature. Based on personal experience and sectoral observations, here’s how we can practically deal with the core pain points:
1.Multiplicity of Stakeholders
The Issue:
Dealing with homebuyers, banks, landowners, contractors, and authorities—each with their own priorities—is like walking a tightrope. Homebuyers alone can number in the hundreds and aligning them is a massive effort.
My Approach:
- Form a representative homebuyer committee—a smaller, focused group that helps streamline communication.
- Regular online meetings or updates to keep all stakeholders informed and reduce anxiety.
- Create a dedicated grievance email or portal—it helps manage expectations and reduce confusion.
2. Missing or Unorganized Documentation
The Issue:
Many developers maintain disorganized or incomplete records, making due diligence a nightmare.
How I Tackle It:
- Set up a centralized online dataroom early in the process.
- Hire a forensic auditor to reconstruct financial history where records are lacking.
- Proactively disclose gaps to protect myself and keep the CoC informed—transparency builds trust.
3. Complex Land and Asset Structures
The Issue:
Often, there are JDAs, third-party landowners, or leases that complicate ownership and development rights.
Solution:
- Engage a land and title expert to conduct thorough legal verification.
- In suitable cases, propose a clean SPV structure for easier asset transfer.
- Directly liaise with land authorities for updated encumbrance certificates and mutation status.
4. Jurisdictional Confusion (RERA vs IBC)
The Issue:
Homebuyers often run to RERA or consumer courts, leading to parallel proceedings and further confusion.
What Works:
- Conduct legal awareness webinars for homebuyers explaining how IBC overrides parallel claims.
- If required, move NCLT for clarity and consolidation of proceedings under IBC.
- Suggest a common legal representative for homebuyers to streamline representation and reduce conflicting litigation.
5. Lack of Funding for Construction
The Issue:
With no working capital and banks reluctant to lend to insolvent projects, completion seems impossible.
Solutions I’ve Found Effective:
- Get interim finance approved by CoC, even if it takes some persuasion.
- Approach SWAMIH or similar government-backed funds—they’ve shown willingness to fund eligible stalled projects.
- Structure co-development partnerships with builders ready to invest in return for revenue rights.
6. Valuation Disputes
The Issue:
Determining a fair value for a partially completed, unsold, or disputed real estate project is subjective and leads to delays.
My Strategy:
- IBC laws provide for appointment of two valuers for each class of assets. Present both valuations to CoC for informed decisions.
- If gap in value of two valuers is more than 20%, appoint 3rd valuer and present all three valuers report to COC for transparency and decision making.
- Use a hybrid valuation model—combine cost-to-complete, discounted cash flow (DCF), and market comps.
7. Lack of Interest from Resolution Applicants
The Issue:
Reputed developers often avoid litigation-heavy projects with poor documentation.
How I Attract Applicants:
- Develop a clean, investor-friendly pitch deck showcasing the project potential.
- Offer risk-sharing mechanisms—for example, staggered payments or profit sharing.
- Seek NCLT’s help to allow conditional bids wherever required, if required.
8. Delays in Resolution Timelines
The Issue:
Although IBC mandates 330 days, real estate cases drag on due to litigation and procedural issues.
Steps That Help:
- Internally plan for a 180-day target with weekly timelines.
- File for expedited hearings and push for single-window clearances wherever possible.
9. Emotional Involvement of Homebuyers
The Issue:
Homebuyers are not just financial creditors—they’re emotionally attached to their homes, and their pressure is constant.
What Helps Manage This:
- Keep communication transparent, simple, and regular—it reduces fear and builds credibility.
- Set up a dedicated helpdesk team to handle their queries and provide updates.
- Empathize—acknowledge their concerns even when you can’t solve everything immediately.
Final Word
Navigating real estate insolvency isn’t just about legal compliance—it’s about managing human emotion, regulatory complexity, and financial distress all at once. The above strategies are tried and tested tools that I’ve used or observed in real cases. Each project is unique, but these solutions provide a workable blueprint for smoother resolution.
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I am Insolvency Resolution Professional handling many real estate projects. In case of any queries related to IBC, you may contact me at Krit Narayan Mishra, kritmassociates@gmail.com; 9910859116
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