https://www.mca.gov.in/content/dam/mca/pdf/IBC-2016-20230118.

pdf

Therefore, it is being considered that when an application is filed to initiate the CIRP in
respect of a CD who is the promoter of a real estate project, and the default pertains to one or
more of its real estate projects; the AA, at its discretion, shall admit the case but apply the
CIRP provisions only with respect to such real estate projects, which have defaulted.
Accordingly, such projects shall be recognised as distinct from the larger entity for the limited
purpose of resolution. This will serve a dual purpose. First, the stressed projects, which
caused the CD’s insolvency, can be resolved separately. The debtor can continue to focus on
other projects where it has not defaulted. Second, a suitably tailored resolution can be
achieved based on the status of the real estate project and the objectives of the relevant
stakeholders, which will primarily include the allottees of that project.

https://www-livelaw-in.nlujodhpur.remotexs.in/articles/reimagining-insolvency-resolution-
reverse-cirp-a-game-changer-for-indias-real-estate-sector-241056 - good one & imp too

NCLAT is recognized as being the birthplace of the Reverse Corporate Insolvency Resolution
Process (“Reverse CIRP”). Reverse CIRP is a form of Corporate Insolvency Resolution
Process (“CIRP”) in which a company’s promoters are permitted to invest in a project as a
lender while remaining outside of the process. The traditional CIRP was unable to uphold the
interests of homebuyers to an adequate degree, and as a result, it was subject to a variety of
critiques on this front. As a result, the courts investigated the various grounds and presented a
novel concept, which they termed “Reverse CIRP”. This idea is presented in order to deal
specifically with the problems that are associated with real estate. In the case of Flat Buyers
Association Winter Hills-77 v. Umang Realtech Pvt. Ltd. through IRP and Others [11], the
NCLAT introduced the concept of the ‘Reverse Corporate Insolvency Resolution Process’.
The NCLAT mentioned that in the case that any promoter of the real estate company in
question intends to play the role of a lender by infusing funds for the completion of the
project, but agrees to remain outside of the CIRP, this will not be considered a violation of the
CIRP.

In the regular CIRP, the Promoter gets eliminated, the priority is given to the banks and
financial institutions, and presumably, homebuyers get the worst bargain; as a result, it failed
to achieve the objective of the IBC for businesses in real estate. Also, the majority of the real
estate companies eventually went into liquidation, and very few of those who attempted to
implement a resolution plan were successful. As a result, the NCLAT came up with an
innovative concept called reverse CIRP. It was also a very controversial decision due to the
fact that the Promoters would once again be in charge of the company’s operations;
previously, the consensus was that the Promoters should be omitted from the main company’s
affairs. This novel approach will be successful unless and until the homebuyers receive their
money; otherwise, it will contradict the spirit of the IBC.

1. Project-wise CIRP: The Indian judicial system has demonstrated the importance of
undertaking experiments on the IBC frequently. In the case Swiss Ribbons (P) Ltd. v.
Union of India[12], the Supreme Court made the statement referring, inter alia, to
various American decisions in paras, that the legislature must be given free play in the
joints when it comes to economic legislation. This Hon’ble Court referred to
the Swiss Ribbons[13] case and decided in the Essar Steel India Ltd. (CoC) v. Satish
Kumar Gupta[14] that the Insolvency Code is a legislation which deals with economic
matters and, in the larger sense, deals with the economy of the country as a whole. To
experiment with things economic is a grave responsibility, and denial of the right to
experiment is fraught with serious consequences to the nation. In the case, Flat
Buyers Association Winter Hills-77 v. Umang Realtech Pvt. Ltd. through IRP and
Others[15], the NCLAT for the first time adopted the concept of ‘Project-wise CIRP’.
The rationale behind this was to maximize the value of the assets in order to establish
a balance between the claims and rights of all the creditors. In the case of Manish
Kumar v. Union of India[16], the Supreme Court stated its perspective that allottees
may have various concerns in relation to different projects, and therefore including all
of the projects in CIPR would be an onerous task. However, in the case of Mr. N.
Kumar RP of M/s. Sheltrex Developers Pvt. Ltd. v. M/s. Tata Capital Housing
Finance Ltd.,[17] the Chennai Bench of the NCLT went against earlier judgements and
held that this concept cannot be applied generally and that its application is dependent
on the facts and circumstances. It added that project-wise CIRP is beyond the
horizons of the IBC.