Authorized representative has to be from home state or UT of majority home buyers

Home buyers, who are stuck with real estate projects going through insolvency proceedings, will now have easier access and better co-ordination with the authorized representative they choose to represent them in Committee of Creditors’ proceedings and vote on their behalf.

The Insolvency and Bankruptcy Board of India (IBBI) has amended the regulations governing selection of the authorized representative to provide that the authorized representative so selected has to be from the state or union territory, which has the highest number of creditors in the class as per records of the corporate debtor. This has been done to facilitate ease of coordination and communication between the AR and the creditors in the class he represents.

The Insolvency and Bankruptcy Code, 2016 (Code) requires appointment of an authorized representative (AR) by the Adjudicating Authority to represent financial creditors in a class, like allottees under a real estate project, in the committee of creditors. For this purpose, the Regulations require the interim resolution professional to offer a choice of three insolvency professionals (IP) in the public announcement, and the creditors in a class to choose one of them to act as their authorized representative.

At present the regulations require the authorized representative to seek voting instructions from creditors in a class at two stages — before the meeting and after circulation of minutes of meeting. This has been amended and the regulations now require the authorized representative to seek voting instructions only after circulation of minutes of meeting and vote accordingly. He should, however, circulate the agenda, and may seek preliminary views of creditors in the class before the meeting, to enable him to effectively participate in the meeting.

In yet another significant change, the CoC will now be required to vote on all compliant resolution plans simultaneously, and the plan which will receive the highest votes, but not less than sixty-six percent of voting share, shall be considered as approved. Earlier, the regulations required the committee of creditors to evaluate all compliant resolution plans as per evaluation matrix to identify the best of them and may approve it.