New Delhi: It seems ‘Achche Din’ have come for at least home buyers in the country. President Ram Nath Kovind has approved the ordinance amending the insolvency law, Insolvency and Bankruptcy Code Amendment Ordinance, 2018. Now, the homebuyers will be considered as financial creditors to real estate developers.
This approval now gives the home buyers, who have remained at the mercy of real estate developers, a big weapon to fight them. Now, the home buyers will get representation in the committee of creditors (CoC).
There have been several cases in the recent past itself where the buyers have not been given possession or the possession is so delayed that the buyers are facing double trouble in terms of finance as they have to pay rent as well as EMI.
After RERA, the new insolvency ordinance will benefit the home buyers much and the market would become much transparent as now the buyers will be integral part of decision making process of resolution proposals.
In the Insolvency and Bankruptcy Code Amendment Ordinance, 2018, the homebuyers can now invoke Section 7 of the IBC. Under this section, the financial creditors are allowed to file insolvency application seeking resolution process. Along with RERA, this gives much strength to the buyers who were not able to take any proper step once the developers declare themselves bankrupt. Also this move was an awaited one as a lot of homebuyers are going through tough time due to delayed and incomplete projects.
Corporate Affairs Secretary Injeti Srinivas said, “Even if one homebuyer moves the NCLT (National Company Law Tribunal), the company can go in for insolvency. That is the intention of bringing them into the creditors fold.”
However, the amended Insolvency and Bankruptcy Code (IBC) does not specify if homebuyers will be treated as secured or unsecured creditors. “The homebuyer will have to prove which category of creditor he is qualified to be as per the agreement with the real estate company,” Srinivas said.
Insolvency and Bankruptcy Board of India will frame the detailed mechanism of representation of the homebuyers on the committee of creditors.