NEW DELHI: The Insolvency & Bankruptcy Board of India has proposed that authorities permit registration of properties owned by real estate companies facing insolvency action – a move that will benefit lakhs of homebuyers who have taken possession of apartments or houses where occupancy or completion certificates have been issued.
It has cited two rulings – one by Supreme Court and another by NCLAT (National Company Law Appellate Tribunal)- to make a case for transfer of property during the resolution process provided the dues have been cleared and the committee of creditors have approved it.
Besides, in a consultation paper, it has suggested that units where possession has been given should be kept out of the insolvency process apart from handing over possession on an “as is where is basis”.
Bidding for insolvency-hit realty units may get easier
In several housing projects, agencies have been reluctant to register properties, creating uncertainty for homebuyers, who invest their lifetime savings.
Besides, backing homebuyers seeking to bid for insolvency-hit real estate projects, the discussion paper has recommended waiver of eligibility criteria, earnest money deposit and performance security requirement for allottee associations or groups representing 10% or 100 allottees (whichever is higher). The clause has been suggested to remove any ambiguity regarding the powers of the committee of creditors to relax the eligibility norms.
“The suggestions have been made to smoothen the process,” said an IBBI official.
In the same vein, Insolvency & Bankruptcy Board of India has suggested amendments to the regulations allowing land owning authorities to participate in meetings of the committee of creditors – but without voting rights.
The idea is to ensure that the concerns of the agency are flagged in the meeting and the committee of creditors, which includes homebuyers in case of real estate, can address them or the govt entity attends to them instead of flagging them in the insolvency tribunal, delaying resolution by years, as is the experience in several cases.