Successful Resolution of a Stalled Real Estate Developer Under IBC
Representation of a resolution applicant through the full CIRP process for a large stalled residential project developer — navigating Section 29A eligibility, homebuyer class CoC voting, and NCLAT challenge.
Practice Areas Involved
The Challenge
A private equity-backed real estate developer sought to acquire a stalled residential project developer under the IBC resolution process. The target had approximately 2,400 homebuyers whose flats remained undelivered after five years of construction stoppage, total admitted claims of ₹1,840 crore across financial creditors, operational creditors, and homebuyers, and multiple ongoing consumer forum complaints. The complexity was exceptional: homebuyers constituted a separate class within the Committee of Creditors following the Flat Buyers Amendment, and their voting cohort required separate management. The resolution applicant's promoters included an individual with indirect association with a company that had an NPA designation — creating a Section 29A eligibility risk that needed careful legal analysis before committing to the bid process. The approved resolution plan filed by a prior applicant had been challenged by a financial creditor at NCLAT, creating uncertainty about timeline and the applicable legal framework.
Our Approach
The engagement began with a Section 29A eligibility audit — a forensic review of the resolution applicant's entire corporate group to identify any disqualification risk. One indirect shareholding chain did expose a technical Section 29A risk; we advised on a pre-bid corporate restructuring that cleanly addressed the exposure before submission, with a legal opinion supporting eligibility filed alongside the resolution plan.
We structured the resolution plan with a dual-track delivery commitment: a ring-fenced construction completion fund backed by performance guarantee, and a deferred payment structure to financial creditors linked to project milestones. The homebuyer class treatment — offering actual flat delivery over a defined construction schedule rather than cash — was critical to achieving the 66% homebuyer class vote required.
When a minority financial creditor challenged the approved plan before NCLAT on grounds of plan discrimination, we filed a counter-affidavit establishing that the differential treatment between creditor classes was commercially justified and compliant with Section 30(2) of the IBC. The NCLAT upheld the plan.
The Result
The resolution plan was approved by NCLT Delhi within 14 months of the CIRP commencement — within the statutory timeline. NCLAT dismissed the financial creditor challenge within four months of filing. Construction recommenced within 90 days of NCLT approval. The resolution applicant is currently on track for project completion within the committed 36-month schedule.
Homebuyers received the highest recovery rate among all creditor classes — actual flat delivery — which was the commercial outcome that mattered most to this constituency and avoided the political and reputational risk of a prolonged post-approval dispute.
Key Lessons
- ◆Section 29A eligibility must be assessed across the entire corporate group of the resolution applicant — not just the direct bidding entity — before committing to the bid process.
- ◆Homebuyer class treatment in real estate CIRP is best structured around actual delivery commitments rather than cash — homebuyers vote on what they originally contracted for.
- ◆Post-approval NCLAT challenges are foreseeable and should be anticipated in the resolution plan drafting — build in a clear record on Section 30(2) compliance.
- ◆Separating project completion funding from the resolution plan consideration amount through a ring-fenced structure provides credibility to delivery commitments.
Facing a similar challenge?
Our Insolvency & IBC team has extensive experience with matters like this. Every consultation is with a senior partner.