Regulator planning new insolvency framework for homebuyers

The Insolvency and Regulatory Board of India (IBBI), or the insolvency regulator, has been contemplating a separate regulatory framework for homebuyers in the corporate insolvency resolution process (CIRP) of real estate projects.

And hence it has invited suggestion from public, including the stakeholders, for 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 Code.

IBBI also invites specific suggestions for bringing improvements, if any, in the process of resolution of real estate projects vis-à-vis homebuyers for better and effective resolution of such real estate project.

Here are some of the issues on which it has sought suggestions:

Issues related to participation in the process

• Need to enhance / modify the role of authorised representative (AR).
• Need for project wise AR.
• Effective communication between AR and homebuyers.
• Provision for replacement of AR.

Issues related to claims:

• Mandating IRP to approach homebuyers for claims based on corporate debtor’s (CD’s) records.
• Dealing with claims submitted with delay.
• Treatment of claims of landowner if the land title is not in the name of CD.
• Claims/interest of those who have taken possession.
• Treatment of orders passed by RERA in claims.

Issues related to conduct of process

• Change in Valuation methodology to capture project wise value. Assessment of the required cost to complete project(s).
• Means to arrange funding for completion of the process.
• Monitoring of construction during the process.
• Accountability of RP towards homebuyers.

Resolution

• Treatment of land title in in the resolution plan, when the same is in the name of promoters, other person or government agencies.
• Resolution Projectwise or Towerwise instead of CD as a whole.
• Possibility of Homebuyers themselves taking up as RA.
• Means to take up construction of common amenities like sewer, park etc.
• How to deal with unsold inventory in various projects/towers.
• How to achieve timely resolution.
• Treatment of homebuyers who do not vote in favour of resolution plan.

Liquidation

• Consequences if the CD goes into liquidation. Treatment of those allotees who have taken possession, and those who have not.

Also read: Insolvency panel for curb on revision of resolution plans, code of conduct for CoC