The legal experts deliberate on the status, rights and resolutions for home-buyers under IBC. The importance of collaboration amongst stake holders, financial institutions, operational creditors and establishing consensus for a seamless resolution plan which will result in the more effective process that benefits everyone involved.
Aashiesh Agarwaal, Senior Vice President - Research and Investment Advisory, Capital Markets, ANAROCK Capital Advisors Pvt Ltd considers IBC a boon for all creditors who have been struggling with high delinquencies. It has dramatically reduced resolution timelines and gives superior resolution rates and better recoveries. The threat of corporate insolvency process has become a negotiating tool in the hands of creditors to recover dues. There are about 1500 projects stuck across 4.5 lakh units. In this context IBC has been a saviour for the home buyers and a window of opportunity for developers to resolve the situation.”
Siddharth Batra, Advocate-On-Record, Supreme Court of India, Former Additional Advocate General, Haryana said, “Remedies provided by IBC puts pressure on developer to complete the project on time and give possession as per te agreement. We have judgements supporting the home-buyers, and even tribunals are forth-coming when it comes to the rights of home-buyers. The law recognizes allottee’s rights as the financial creditor which is a great step forward.”
Dhaval Vussonji, Managing Partner, Dhaval Vussonji & Partners explained the procedure of the IBC for the homebuyers. “It is absolutely essential for the home-buyers to pass a resolution for professionals to file their claims. The resolution professionals can admit the claim only when they are able to verify the sales by the developers. Home-buyers represent the class of creditors, individually they don’t have the right to sit on the committee of creditors. The resolution professional on behalf of the homebuyers communicates the problems and votes.”
Sonam Chandwani- Founder & Managing Partner, KS Legal and Associates added, “Home-buyers should diligently monitor the process and take active part in COC meetings through authorised representatives who can voice their concerns, suggestions, or preferences and ensure their interest is taken into consideration in decision making. Also, it is important to have a legal expert to guide and offer a strong representation. This ensures their rights are protected and any disputes or issues are addressed effectively. Collaboration amongst stake holders including, financial institutions, and operational creditors is important to help establish a consensus which will result in more effective process that benefits everyone involved.”
Saurav Panda, Partner, Shardul Amarchand Mangaldas & Co stated, “Secured creditors, unsecured creditors, operational creditors, all of them have their own vested interests within the process. The end objective is to find a resolution. When the law came in there was no place for the homebuyers on the table, later they were recognised as financial creditors and the law was amended to that effect. The way the law has now evolved it has given a level playing field to home-buyers. They have options of RERA, Consumer Protection Act and IBC. The banks and financial creditors also have multiple options. Even if there is a restructuring of the ultimate debt of the company through the RBI framework for banks and financial institutions, it may work out in the best interest of the home buyers, given the project will get completed.”
Orijit Chatterjee- Partner, Fox Mandal & Associates expressed, “IBC at this point in time is linked to the RERA and allottee under RERA are well defined. While IBC recognized homebuyers as the financial creditors, there has to be either one hundred home buyers or ten per cent of allottees of a housing project that will be needed to initiate insolvency resolution process against the defaulting developer. IBC for the home-buyers is the last resort, but it doesn’t guarantee quick resolution.”
IBC is largely focused on resolving the NPA issue, as a consequence, treating real estate transactions as financial transactions could dilute the objective of homebuyers who value allotment of flat.
NCLT procedure should have an over-arching reach on the local authorities as well like SRA and MHADA.
In the Reverse Corporate Insolvency Resolution process, NCLAT agreed for one of the promoters to play the role of the lender to ensure that the allottees would take possession of their respective flats/apartments.
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