Homebuyers can get possession of flats during insolvency process
In a significant relief for distressed homebuyers, resolution professionals can now hand over possession of plots, apartments, or buildings during the insolvency process, provided all obligations are met and the committee of creditors (CoC) approves. This will prevent prolonged delays in property handovers.
This was part of several key amendments introduced by the Insolvency and Bankruptcy Board of India to the insolvency and bankruptcy laws. The amendments, which come into immediate effect, aim to enhance efficiency and transparency in corporate insolvency resolution, with a specific focus on real estate projects.
Other key Changes in the CIRP Regulations
- Involvement of Land Authorities in Resolution Plans: The Committee of Creditors (CoC) can now invite government land authorities such as NOIDA and HUDA to meetings to provide regulatory insights on real estate projects. Their involvement is expected to enhance the feasibility of resolution plans and boost confidence among stakeholders.
- Mandatory Report on Development Rights & Approvals: Within 60 days of the insolvency commencement, the Resolution Professional must submit a report detailing the status of development rights, approvals, and permissions for real estate projects. This will help creditors make informed decisions on the viability of ongoing projects.
- Relaxations for Homebuyers as Resolution Applicants: To facilitate homebuyers’ participation in the insolvency process, CoCs now have the authority to relax eligibility criteria, performance security, and deposit requirements for associations or groups of allottees willing to submit resolution plans.
- Mandatory Monitoring of Resolution Plan Implementation: CoCs are now required to form a monitoring committee to oversee the implementation of approved resolution plans. This committee—comprising the Resolution Professional, creditor representatives, and the successful resolution applicant—will submit quarterly progress reports to the adjudicating authority, ensuring transparency and accountability in execution.
- Appointment of Facilitators for Creditors: To improve participation in insolvency proceedings, facilitators can now be appointed for large creditor classes such as homebuyers. These facilitators will assist in communication between creditors and their representatives and provide necessary clarifications about the resolution process.
- MSME Registration Disclosure: Resolution Professionals must now disclose the corporate debtor’s MSME registration status during the insolvency process. This move is expected to encourage greater participation from MSMEs by allowing them to access benefits and relaxations under the Insolvency and Bankruptcy Code (IBC).
Also See: RBI suspends board of Aviom India Housing Finance; to start insolvency proceedings
