Home buyers of stressed realty projects may be governed by a different regulatory framework if the proposal submitted by the insolvency regulator for public comments is approved.
The Insolvency and Bankruptcy Code (IBC) was amended in 2018 to clarify the status of home buyers as financial creditors. However, a large number of real estate projects, including Supertech and Jaypee InfratechGoing through insolvency process.
“It has been conveyed to the Insolvency and Bankruptcy Board of India (IBBI) that real estate projects require different exemptions than normal projects,” the regulator said.
IBBI has now invited suggestions from the public if “any separate regulatory framework for home buyers in Corporate Insolvency Resolution Process (CIRP) of real estate projects is required or some amendments are required within the existing framework of IBC in the existing rules”. .
Earlier, after the government granted financial creditor status to home buyers, the IBC was amended to stipulate that at least 100 or 10% of home buyers would be required to initiate insolvency against a developer. Its purpose was to prevent any possible misuse of the law by some unscrupulous elements within the homebuyer community.