With land becoming increasingly expensive and scarce in major urban markets, small and mid-sized real estate developers are turning to insolvency proceedings to acquire distressed property companies and gain access to projects, development rights and existing assets.
Several developers are now competing for companies undergoing resolution under the Insolvency and Bankruptcy Code (IBC), rather than purchasing land outright. In the past quarter, National Company Law Tribunal (NCLT) benches across India have approved more than a dozen real estate-related acquisitions.
The trend is particularly visible in Mumbai, Delhi-NCR and Bengaluru, where limited availability of developable land has pushed acquisition costs higher.
NPS Chawla, co-founder of law firm AEKOM Legal, said redevelopment has become increasingly competitive as larger developers with stronger financial capacity enter the segment.
“Still, acquiring a distressed developer can carry significant risks. Buyers have to assess title and approval issues, pending litigation, construction obligations, and claims from lenders, homebuyers, contractors, and other creditors. A successful resolution plan doesn’t guarantee that a stalled project will quickly become profitable,” said Chawla.
Last month, the NCLT approved Bharadvaja Buildcon LLP’s acquisition of Radius & Deserve Land Developers, a joint venture of Aspect Group. The company had admitted liabilities exceeding ₹3,255 crore, with the successful bidder proposing a resolution plan to revive its operations.
“NCLT acquisitions can provide access to established projects and development rights, while also bringing the responsibility of addressing underlying operational and execution challenges. Such opportunities require careful due diligence, particularly around approvals, liabilities and the status of project execution, before taking on the asset,” said Sandeep Shetye, president, business development, Aspect Real Estate Developers.
Ruchi Khatlawala, partner at Little & Co., said rising land prices and growing competition for redevelopment opportunities are changing the role of insolvency proceedings in the real estate sector.
According to the Insolvency and Bankruptcy Board of India, 1,977 of the 8,987 companies admitted for resolution under the IBC until March-end were from the real estate sector, accounting for about 22%.
Recent NCLT approvals include Oriental Structural Engineers’ acquisition of Accil Corporation, which operates the Holiday Inn Jaipur City Center, and Aadarsh Kumar Surana’s acquisition of Amar Prakaash Developers. Mantra Properties and Developers also secured approval for its resolution plan for Siddhi Raj Housing Projects.
The growing number of bidders indicates that distressed real estate companies are increasingly being viewed as potential acquisition platforms rather than merely recovery cases for creditors.
Source: The Economic Times
