The Insolvency & Bankruptcy Board of India (IBBI) is gearing up to finalise crucial amendments to regulations, spanning simplifying procedures for home buyers to refining personal and corporate insolvency proceedings. The move aims to enhance the functioning of the seven-year-old insolvency regime.
Key amendments concerning corporate insolvency primarily focus on procedural enhancements. However, the amendments related to real estate carry significant implications for homebuyers, drawing inspiration from recommendations by the expert committee led by Amitabh Kant, India’s Sherpa to G20.
One crucial proposal seeks to facilitate property registration during insolvency proceedings, offering increased transparency for stakeholders. Another proposal empowers resolution professionals to break up a company into projects, attracting bids and making the resolution process more appealing to both homebuyers and potential resolution applicants.
Relief to homebuyers
One noteworthy aspect is the proposed transfer of rights, allowing homebuyers immediate relief for homes stuck in the insolvency process. This move is expected to provide assurance to those currently buying homes, ensuring their investments are secure even if the builder faces challenges.
Additionally, IBBI suggests excluding properties where the allottee has taken possession from the liquidation estate, preventing confusion arising from conflicting court rulings. This implies that homes already allotted to buyers will remain with them, even if the building company faces liquidation.
Moreover, IBBI recommends the splitting of projects, encouraging resolution professionals to invite separate resolution plans for each project. This move aims to simplify the resolution process, attracting more buyers for projects perceived as less risky and more viable.
As IBBI progresses with these amendments, homebuyers stand to benefit significantly, from increased transparency, immediate relief, and enhanced security for their investments in the real estate sector.
Regarding companies
In response to the recent Supreme Court order addressing the insolvency of personal guarantors, IBBI is contemplating changes related to the appointment of resolution professionals. This becomes particularly pertinent following legal actions against prominent businessmen, including Anil Ambani, Venugopal Dhoot, and the Ruias of Essar.
The proposed amendments also aim to streamline the liquidation process by addressing existing difficulties, ensuring a smoother transition for companies facing insolvency.
