Homebuyers to Get Big Say in Insolvency Proceedings for Property Developers

Homebuyers might be considered on a par with financial creditors who are unsecured for real estate leaders at insolvency proceedings. The move will be cheerful to those who acquired residences, when adopted, from the companies, such as Unitech, Jaypee Infratech, and Amrapali and they are found at the back of the queue when looking for recompense. It is one of the proposals which are made by committee that are engaged to review the IBC or Insolvency & Bankruptcy Code and is being considered by the government, according to two senior officials who know about the development.

About Voting Rights
Thousands of developers have been in the pitch after Amrapali and Jaypee Infratech referred to the Bank of Baroda and NCLT by IDBI Bank, for failing to pay their dues. Along with it, the ministry of corporate affairs moved the court of bankruptcy to control Unitech. This insolvency law committee included 14 members and set up to factors which impact the efficiency of liquidation framework and insolvency resolution and to make recommendations in order to focus on them.

In an interview which was taken separately, Injeti Srinivas, corporate affairs secretary, said that the draft amendments and recommendations to the IBC are going to be presented by the end of the month. If the measure is adopted on homebuyers, the best thing for them is going to be right to take part in the process of insolvency resolution and the committee of creditors. It would also enable them with rights to vote on resolution plans.

According to an official, “A proposal has been considered actively to give a status of unsecured creditors to the homebuyers. This move will care for the interest of all stakeholders.” For the typical waterfall mechanism, the existing IBC norms would provide 8 levels for order of precede distribution from the liquidation asset sales among the stakeholders. After administrators and resolution pros, workmen and financial creditors’ dues getting prioritized, there are unpaid dues of workers along with workmen. After the equity shareholders and government dues, there are unsecured financial creditors. The SC stayed the move after the appeal from Unitech.