NEW DELHI: The Insolvency and Bankruptcy Board of India has amended rules to allow distressed homebuyers to take possession of their properties while the resolution process is ongoing.
The amendments, notified on February 3, and effective immediately, aim to enhance efficiency in insolvency proceedings, particularly for real estate projects, by introducing measures such as appointing facilitators, involving land authorities in the process, and ensuring better monitoring of resolution plans, according to an official release.
The Insolvency and Bankruptcy Board of India (IBBI) has amended rules governing the corporate insolvency resolution process.
One of the important changes empowers resolution professionals after obtaining approval of the Committee of Creditors and upon fulfilment of all obligations can now hand over possession of plots, apartments, or buildings to the homebuyers while the resolution process is still ongoing, the IBBI said.
This move is expected to ease the long delays often faced by homebuyers awaiting resolution of stalled real estate projects.
Further, large creditor classes such as homebuyers can now have facilitators to improve their participation in the resolution process. These facilitators will act as intermediaries between authorized representatives and creditors, ensuring seamless communication and clarity regarding insolvency proceedings, as per the release.
To enhance the viability and feasibility of resolution plans, the committee of creditors can invite land authorities such as NOIDA and HUDA to meetings, allowing them to provide inputs on regulatory and land development matters.
This measure will build confidence among homebuyers and stakeholders in the resolution process.
According to the release, resolution professionals are now required to submit a comprehensive report within 60 days of insolvency commencement, detailing the status of development rights, approvals, and permissions for real estate projects.
This will provide clarity on project viability thereby helping creditors to make informed decisions in a timely manner.
To encourage homebuyer participation in the resolution process, the committee of creditors has been granted flexibility to relax certain conditions for associations or groups of homebuyers seeking to submit resolution plans in the insolvency process, including eligibility criteria, performance security, and deposits, the Board said.
The amendments also mandate the formation of a monitoring committee comprising the resolution professional, representatives of creditors, and the successful resolution applicant to oversee the implementation of the resolution plan.
This committee must submit quarterly progress reports to the adjudicating authority to ensure accountability and timely execution of approved plans, it added.
Additionally, the resolution professionals are now required to disclose whether the corporate debtor is registered as a micro, small, or medium enterprise (MSME).
This will encourage greater participation by potential resolution applicants as they can avail benefits and relaxations for MSMEs under the insolvency code.
