The Insolvency and Bankruptcy Code is the most important economic reform the Modi government has initiated and seen through. But in cases of real estate companies, one reasonable demand has been for representatives of homebuyers to be included in the committee of creditors that finally approves the resolution plan.
If this wasn’t done, insolvency proceedings may completely neglect the interests of homebuyers and leave them without remedy, even though they may have invested all their hard-earned and life-long savings into a flat.
So it is good news for homebuyers that yesterday the Union cabinet cleared an ordinance to amend IBC and (among other changes) enable representatives of homebuyers to be part of the committee of creditors, which will help ensure that banks do not secure only their own interests in ailing companies such as Jaypee Infratech, Supertech and Amrapali – instead, the most vulnerable and aggrieved stakeholder can hope to get a fairer deal.
At the same time it’s worrying that one year after the Real Estate (Regulation and Development) Act, 2016 or RERA came into force in its entirety, “for protecting the interests of consumers and … efficient and time bound execution of projects,” compliance across the country presents a gloomy picture.
via Bankruptcy ordinance: Government extends lifeline to distressed homebuyers