In a significant development offering relief to homebuyers, the Insolvency and Bankruptcy Board of India (IBBI) has introduced a crucial amendment aimed at safeguarding assets in real estate projects. According to the latest notification dated February 12, assets that have been allotted to the homebuyer will be excluded from the liquidation process of the company. This proactive move by the IBBI aims to address the concerns of homebuyers and ensure their interests are protected during corporate insolvency proceedings.
Protecting Homebuyer Assets:
The recent amendment, reflected in clause (e) of sub-section (4) of section 36, specifies that any asset in a real estate project that has been handed over to the allottee will not form part of the liquidation estate of the corporate debtor. This provision is a welcome relief for homebuyers who have invested their hard-earned money in real estate projects and are often left vulnerable during insolvency proceedings.
Pragmatic Approach by the Regulator:
Real estate experts have hailed the IBBI’s decision as a pragmatic approach towards addressing the challenges faced by homebuyers. While acknowledging the importance of this amendment, experts also highlight the need to address cases where possession has not been given due to the project being stuck in insolvency. This calls for a comprehensive review by the IBBI to ensure equitable treatment for all stakeholders involved.
Enhanced Role of RERA:
The IBBI’s move also aligns with its earlier proposal for an increased role of the Real Estate Regulatory Authority (RERA) in corporate insolvency resolution processes. The proposal advocates for compulsory registration of all real estate projects undergoing corporate insolvency resolution with RERA, thereby empowering homebuyers and ensuring greater transparency in the process.
Significant Relief for Homebuyers:
The new amendment is expected to provide significant relief to homebuyers, allowing them to have a say in the Committee of Creditors (CoC) and ensuring their interests are duly represented. By excluding allotted assets from the liquidation process, the amendment aims to minimize litigation and streamline the insolvency resolution process in the real estate sector.
Conclusion:
The IBBI’s amendment to keep allotted houses out of liquidation marks a positive step towards enhancing homebuyer protection and ensuring fairness in corporate insolvency proceedings. Moving forward, it is imperative for regulators and stakeholders to collaborate closely to address the complexities of the real estate sector and uphold the rights of homebuyers.