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New Delhi: The government is considering a proposal to allow without any hindrance registration of flats In completed projects even while the developer is working bankruptcy Resolution.
It may also enable the National Company Law Tribunal (NCLT)NCLT) to obtain inputs from the concerned Real Estate Regulatory Authority (Rare), given the complexities of bankruptcy resolution in the housing sector, where homebuyers are also financial creditors Insolvency and Bankruptcy Code (IBC), people aware of the details told ET.
The suggestion has been incorporated in the proposed amendments. bankruptcy code.
closing deals
The proposed move is expected to provide relief to thousands of homebuyers who are worried about the prospect of seeing their money go up in smoke if builders fail.
Additionally, it may encourage homebuyers to make final payments and take possession. Buyers are generally reluctant to complete the payment once the possession is done by the developer.
A source said, “The thinking is that once home buyers have paid for their flats and possession is taken, the moratorium will be lifted and the flats will be treated as stock/stock of the company (instead of assets).” ‘, adding that the proposal is being discussed.
As per some estimates, more than 100 residential projects are either stuck or delayed in the Noida and Greater Noida regions of the National Capital Region alone.
IBC Amendment
Some experts say that the current IBC rules do not prevent the resolution professional from handing over flats to buyers during the resolution process after getting approval from the committee of creditors, but they play it safe. He added that a clear IBC provision allowing flat transfer and registration could reduce the discretion of resolution professionals in this matter.
Manoj Kumar, Partner and Head, M&A & Insolvency Resolution said, “Where full payment has already been received, there is no provision for de-registration of flats in favor of landlords merely because the company is in CIRP (Corporate Insolvency Resolution Process). There should be no reason to.” Services at consultancy firm Corporate Professionals Capital.
In January, the corporate affairs ministry had invited suggestions on a special dispensation for the real estate sector, proposing that the process be limited to insolvent projects and not extend to entire companies including other solvent projects.
According to a study by Grant Thornton India, while real estate comprises about 23% of the total (518 out of 2,298) bankruptcy cases filed, they account for only 13% (78 out of 611) of the resolved cases. .
Yogendra Aldak, Partner, Lakshmikumaran & Sreedharan Attorneys, said the proposed move to transfer ownership or start registration of flats would not only provide relief to home buyers, but also to creditors, as it would improve the cash flow of the insolvent real estate company. Will help to make corrections and stop the sharp fall in price.
Anoop Rawat, Insolvency and Bankruptcy Partner at Shardul Amarchand Mangaldas & Co, said resolution of stressed realty firms is a bit more complex than other bankruptcies. “Given that homebuyers are not in the best position to determine the feasibility and viability of resolution plans, Rare As regulatory authority or any competent representative body can play this role on behalf of home buyers.
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