Homebuyers Have A Mighty Say In Insolvency Proceedings For Real Estate Companies
MUMBAI: Homebuyers will be given as much importance as creditors when it comes to dealing with certain aspects of real estate companies.
Such a decision, if put into force, will definitely make those happy that have bought houses from Jaypee Inftratech, Unitech and Amrapali in future. The buyers will wait their turn seeking compensation.
This proposal was made by a committee tasked with reviewing the Insolvency and Bankruptcy Code (IBC) and under consideration by the government.
After failing to pay their dues, Jaypee Infratech and Amrapali were referred to the NCTL by IDBI Bank and Bank of Baroda. Apart from this, the ministry of corporate affairs has moved the bankruptcy court to take control of realtor Unitech.
A 14-member insolvency law committee has been set up to identify areas within the government that can seriously impact the efficiency of the corporate insolvency resolution and liquidation framework.
By the end of this month, a draft amendment to the IBC along with proper recommendations will be presented. If the recommendation to include homebuyers along with creditors in the insolvency proceedings of the realtors gets approved, it would be a great advantage to the buyer.
The secretary of corporate affairs Mr.Injeti Srinivas said in an interview that the recommendations coupled with the draft amendments to the IBC will be presented by the end of this month. He also said that by adopting the new recommendation, the homebuyers will gain a lot of advantage over the builders and most importantly, gain voting rights equivalent to the creditors when it comes handling insolvency proceedings.
A proposal is actively considered to give home homebuyers a status of unsecured financial creditors — a move which is aimed to take care of the interests of all the stakeholders, said one of the official cited above.
At the moment, the IBC norm provides a flow mechanism consisting 8 different stages, for the order of distribution of proceeds from the sale of liquidated assets among stakeholders. On the list of payments owed by developers, homebuyers are at the end currently. After professionals and administrators, financial creditors and workmen’s dues are a priority.
The proposed amendment will definitely gain a position for the homebuyers. More than 31,000 homebuyers of Jaypee Infratech and 41,000 of Amrapali’s Silicon City project have appealed to the Supreme Court that they should be treated on a par with financial creditors. In this regard, the Supreme Court has ordered Manoj Gaur and family, promoters of Jaypee Infratech, not to sell personal assets and deposit Rs 2,000 crore with the court.
Supreme Court of India has plainly ordered Amrapali to submit a proper plan to deliver apartments to all homebuyers. Where as in case of Unitech, almost19,000 homebuyers have been left hanging with the corporate affairs. The Supreme Court has stayed the move based on the appeal by Unitech.