The homebuyers will now be treated as financial creditors which will allow them to equitably participate in an insolvency resolution process and be a part of the committee of creditors.
Following the Cabinet approval for the amendments to the Insolvency and Bankruptcy Code (IBC) on Wednesday, homebuyers lauded the government's decision and which is a much-needed step in their favour.
"The decision will surely provide relief to the homebuyers as they will now be treated on a par with banks and institutional creditors and will be given priority while recovering dues from bankrupt or insolvent real estate companies," said Vaibhav Saxena, a buyer.
According to the new ordinance, the homebuyers will now be treated as financial creditors which will allow them to equitably participate in an insolvency resolution process and be a part of the committee of creditors. Besides, the proposed resolution plan under the IBC must comply with the provisions of the Real Estate (Regulation and Development) Act, 2016, the high-level panel had recommended to the government in its report.
Real estate developers' body Confederation of Real Estate Developers' Associations of India (CREDAI) has welcomed the move and said that it will protect rights of the homebuyers.
"It is a good move for the protection of their money. RERA protects the money of buyers in an ongoing concern. Now the buyer's investment is protected even in the case of insolvency. This will instill a sense of confidence among buyers of under-construction property. However, for the continued flow of institutional and bank credit to the real estate sector, the system must uphold the superiority of a bank mortgage over any other claim otherwise banks may become hesitant in lending to this sector," says Pankaj Bajaj, President, CREDAI NCR.
A GOOD CHANGE
According to the new ordinance, the homebuyers will now be treated as financial creditors which will allow them to equitably participate in an insolvency resolution process
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