Home buyers will be treated equal to financial creditors for their legal rights. They will have the right to move a resolution process against the insolvent real estate firms and get their money back.
The
Lok Sabha (LS) on July 31, 2018 passed the Insolvency &
Bankruptcy (IBC) Code Bill, 2018 with Second Amendment, seeking to
provide home buyers the status of financial creditors. This will give
the home buyers the right to decide the fate of defaulting builders.
The
Bill was introduced by Finance Minister Piyush Goyal on July 23. The
Minister said the govt brought the ordinance to accelerate the
resolution process. He added that the financial creditor status will
assist home buyers protect their hard earned money.
As
per the bill, lenders will need to seek the prior approval of the
competition regulator before finalizing resolution plans. The move
seeks to stop litigation that can spoil the resolution process at a
later stage. Presently, the winning bidder approaches CCI
(Competition Commission of India) for clearance before formally
taking over the asset.
The
bill aims for home-buyers to get due representation in the COC or
Committee of Creditors, takes a call on resolution proposals and
making them an integral part of the decision making process.
The
amended regulations allow withdrawal of a resolution application with
the approval of 90% members of the committee of creditors. However,
such withdrawal will only be allowable before publication of notice
inviting expressions of interest. This means there can be no
withdrawal once the commercial process of expressions of interest and
bids starts.
The
Minister added, the need to bring the rule is also to save the
interest of home buyers who would now be treated as financial
creditors.
The
Opposition parties demanded the bill be sent to standing committee as
it alleged that by amending the provisions, the govt was helping a
particular corporate house.