Last Updated on June 13, 2018 by Legalseva.net
Finally Home buyers/ Home owners get creditors status in insolvent firms.
From today onwards that is once President promulgate an ordinance to amend Insolvency and Banking Code (IBC), the investments and interest of home buyers are protected when it comes to the insolvency of Builders like Jaypee Infratech, Amrapalli and many more in pipeline.
Changes
1 Now home buyers will have place in Committee of Creditors (COC)
2 They will have say in the future decisions of the bankrupt group.
3 You can also take action against the Builder.
Dilemma- Still whether home buyers will be a secured financial creditor or unsecured, has to be seen?
Jaypee Infratech Case– More than 31,000 home buyers were affected with the insolvency proceedings but home buyers were not recognized under the IBC, 2016, a major bottleneck.
Future– Rules how representatives of home buyers can be a part of COC and protect their interest are worked upon.
Also Read- A MUST KNOW ABOUT INSOLVENCY AND BANKRUPTCY CODE, 2016
Behind the wheels– The effort goes to Ministries of Housing and Corporate Affairs who after the decision of NCLT Allahabad in case of JayPee is trying to find ways to protect home buyers in since 2017
Under IBC, there are 8 levels of distribution in case a builder goes bankrupt and his assets are liquidated to compensate the stakeholders:
1 Resolution Professionals
2 Financial Creditors (FC) banks
3 Workmen
4 Employees who are not workmen
5 Unsecured Financial Creditor
6 Government
7 Equity Shareholders
8 Homebuyers
Also Read- Bankruptcy Law in India Decoded
The major takeaways for the home buyers are:
- Parity with the banks now
- Participation in COC meetings
- voting rights will be given to homeowners
Resolution plan of insolvency hit Realtors should be created strictly in accordance with RERA Regulation of 2016.
Banks taking builders to NCLT thwart the rights to justice of buyers completely. Homebuyers were not even secured creditor, Financial Creditor or operational creditor. Once everyone gets the share then home buyers would be called upon to take their share of pie.
Also Read- DEBT RECOVERY UNDER IBC: A SPEEDY REMEDY FOR CREDITORS
Amrapali builders faced the similar fate. Supreme Court is now insisting these builders to dvise a plan to deliver homes to buyers.
Unitech builder is seeing the same fate as the Managing Director is behind the bars in Tihar Jail.
Now consumer akin home buyers are no not at the end of the list when it comes to distribution of assets If a company is liquidated.
Whether home buyers become secured or unsecured financial creditor that has to be seen in the meantime once the claim reaches to NCLT?
From the news
- Operational creditors seem to be the biggest gainers so far of the introduction of bankruptcy law by TimesofIndia.
- Ordinance Amends Insolvency & Bankruptcy Code by Mondaq
- Why the centre has not classified home buyers as ‘secured’ or ‘unsecured’ creditors under IBC by the businessline
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