Home buyers of stressed realty projects may be governed by a separate regulatory framework if a proposal put forward 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 those of Supertech and Jaypee Infratech, are undergoing insolvency process.
“It has been represented to Insolvency and Bankruptcy Board of India (IBBI) that real estate projects require different dispensation than normal projects,” the regulator said.
The IBBI now has invited suggestions from public if there is a “need for any separate regulatory framework for homebuyers in the corporate insolvency resolution process (CIRP) of real estate projects or some modifications in the existing regulations, within the existing framework of the IBC”.
Earlier, the government, after granting the financial creditor status to home buyers, amended the IBC to stipulate that at least 100 or 10% home-buyers will be required to initiate insolvency against a developer. This was aimed at curbing any potential misuse of the law by a few unscrupulous elements within the homebuyer community.