Builder insolvency: how homebuyers vote in the committee of creditors, and why not voting counts

Rules and rates as of 17 October 2026.

Why homebuyers get a vote at all

When a builder company goes into insolvency under the Insolvency and Bankruptcy Code, 2016 (IBC), the key decisions are taken by a committee of creditors (CoC). Only financial creditors sit on it. Since 6 June 2018, an Explanation to section 5(8)(f) says that any amount raised from an allottee under a real estate project is deemed to be a borrowing. That makes you, the flat buyer who paid instalments, a financial creditor with a seat at the table.

The same status lets buyers start the process, but not alone. Under the second proviso to section 7(1), allottees must apply jointly: at least 100 allottees of the same project or 10% of its allottees, whichever is less.

A big project can have hundreds or thousands of buyers. They do not each sit in the meeting. The Code groups them into a class and puts one person in the room for them.

The authorised representative

Section 21(6A)(b) says that where a debt is owed to a class of creditors above a specified number, an insolvency professional acts as their authorised representative. The IBBI's insolvency resolution regulations (as amended up to 14 October 2025) set that number at ten financial creditors.

Here is how the representative is chosen.

• The interim resolution professional identifies three insolvency professionals for each class. They must not be related to the interim resolution professional, and they should have a registered address in the state with the most buyers in the class (regulation 4A).
• The public announcement of the insolvency lists the three. When you file your claim in Form CA, you mark your choice (regulations 6 and 8A).
• The professional chosen by the highest number of buyers in the class is put forward to the tribunal (regulation 16A(1)).
• Buyers holding at least 10% of the class's voting share can ask for a replacement (regulation 16A).

The representative's fee is fixed per meeting and paid as an insolvency cost: ₹30,000, ₹40,000 or ₹50,000 per CoC meeting for classes of 10 to 100, 101 to 1,000 and more than 1,000 creditors.

How your vote is counted

Each CoC member's voting share is in proportion to its admitted financial debt. For a creditor in a class, regulation 16A(7) says the debt includes interest at 8% a year unless a different rate was agreed.

The decisive rule is section 25A(3A), in force since 16 August 2019. The representative casts the vote of all the buyers in the class "in accordance with the decision taken by a vote of more than fifty per cent. of the voting share" of those buyers "who have cast their vote". In plain terms:

• The class votes as one block, with its full voting share.
• Only buyers who vote decide which way the block goes. A buyer who does not vote is carried along with the majority of those who did.
• The one exception is a vote on withdrawing the insolvency under section 12A. There, the representative follows each buyer's own instructions (the proviso to section 25A(3A)).

Before each CoC meeting, the representative circulates the agenda and may seek preliminary views, with a window of at least 12 hours that opens at least 24 hours after the request. Those views are not voting instructions (regulation 16A(9)). The resolution professional must give every CoC member a way to vote electronically (regulation 26).

What the CoC decides, and by how much

Decision	Voting share needed	Where
Ordinary decisions	At least 51%	s.21(8)
Replace the resolution professional	66%	s.22(2), s.27(2)
Approve a resolution plan	At least 66%	s.30(4)
Hand possession to buyers who have paid, during the process	At least 66%	reg. 4E
Withdraw the insolvency	90%	s.12A

The Insolvency and Bankruptcy Code (Amendment) Act, 2026 (No. 6 of 2026, assent 6 April 2026) substitutes section 12A, keeping the 90% figure, and adds a duty on the CoC to record reasons when it approves a plan. Its provisions start on dates the Centre notifies. Press reports say a first set took effect on 26 May 2026; we could not confirm which ones on an official page.

A worked example

Take an illustrative stalled project. Admitted financial debt is ₹400 crore: a bank with ₹240 crore and the buyers' class with ₹160 crore.

Voting shares: bank = 240 ÷ 400 = 60%. Buyers = 160 ÷ 400 = 40%.

One buyer's claim: Ms Rao (an illustrative buyer) paid ₹60 lakh. With 8% simple interest for 3 years, her claim is ₹60,00,000 + (₹60,00,000 × 8% × 3) = ₹60,00,000 + ₹14,40,000 = ₹74,40,000. That is 0.465% of the class (₹0.744 crore ÷ ₹160 crore) and 0.186% of the whole CoC.

The class vote on a plan: buyers holding ₹90 crore of claims vote; ₹50 crore vote for and ₹40 crore against. For = 50 ÷ 90 = 55.6%, which is more than 50%. So the representative casts the whole 40% in favour, including the share of buyers who voted against or did not vote. Ms Rao's ₹74.4 lakh would be 0.83% of the votes actually cast in the class.

The result: if the bank also votes for, the plan has 100%. If the bank votes against, the plan has 40%, short of 66%, and fails. Turn it round: if the bank votes for (60%) but the buyers' majority votes against, the plan has 60% and also fails. In this example, neither side can pass a plan without the other.

What this means in practice

Three points follow from the rules.

• Not voting is a choice. Under section 25A(3A), the block follows only those who vote. A small, organised group of buyers can decide the class's whole vote.
• File your claim on time. Claims are due by the date in the public announcement. Late claims are allowed up to the later of the issue of the request for resolution plans or 90 days from the start of the process, with reasons if beyond 90 days (regulation 12).
• Your influence depends on the class's share. Where banks hold 66% or more, they can pass a plan without the buyers. Where buyers hold more than 34%, no plan passes without them.

The representative must not act against your interests (section 25A(3)) and is meant to help you understand what the CoC discusses (regulation 16A(10)). For questions on your own claim or a particular plan, an insolvency lawyer is the right person to ask.