The Insolvency and Bankruptcy Board of India (IBBI) proposed a set of reforms aimed at improving the insolvency resolution process for real estate companies. Key proposals include the inclusion of land authorities in the Committee of Creditors (CoC), enhanced transparency through secure online access to CoC meeting minutes, and improvements to the possession handover process for homebuyers. The IBBI also addressed issues such as cancelled land allotments and creditor representation, with the aim of making the insolvency process more efficient, transparent, and inclusive. Stakeholders have been invited to submit feedback on the proposed reforms by the end of November.
In a discussion paper issued last week, the IBBI highlighted several key proposals, including the inclusion of land authorities in the Committee of Creditors (CoC) meetings as invitees, though without voting rights. Currently, only financial creditors have voting representation in the CoC, leaving out land authorities, despite their crucial role in real estate projects. The IBBI noted that land authorities' inclusion would provide greater clarity on regulatory compliance and improve the feasibility of resolution plans.
The discussion paper also addressed the issue of cancelled land allotments in insolvency cases. The IBBI proposed that resolution professionals be required to report such cancellations to the CoC, allowing stakeholders to make informed decisions regarding whether to proceed with the resolution process or opt for liquidation.
In addition, the board suggested enhancing creditor representation, particularly in cases with large numbers of creditors, by allowing multiple facilitators. This, the IBBI stated, would improve communication and ensure more effective representation of creditor interests.
Furthermore, to improve transparency in real estate insolvency cases, the IBBI recommended that the minutes of CoC meetings for real estate projects be made accessible to all creditors through a secure online system. This would not only promote transparency but also help in countering rumours and misinformation surrounding the insolvency process.
Another proposed change focuses on streamlining the possession handover process for real estate projects. The IBBI suggested that resolution professionals be empowered to transfer ownership of properties to homebuyers who have fulfilled their financial obligations, subject to CoC approval. The IBBI has called for stakeholder feedback on these proposals, with comments to be submitted by the end of November. Following the review of the comments, the board plans to amend the rules under Section 196 of the IBC.
In conclusion, The IBBI's proposed reforms are a significant step towards improving the insolvency resolution process within the real estate sector. By enhancing the role of land authorities, improving creditor representation, and fostering greater transparency, these reforms could contribute to more efficient and equitable resolutions in real estate insolvency cases. The emphasis on streamlined possession handover processes and clarity on cancelled land allotments is also likely to benefit homebuyers and other stakeholders, ensuring that their interests are better protected. As the IBBI seeks stakeholder feedback, these changes could pave the way for a more robust and transparent framework for handling real estate insolvencies in the future.
Advertisement
Facebook
Whatsapp
