IBBI Amends Rules to Ease Homebuyers' Woes in Insolvency Process
The Insolvency and Bankruptcy Board of India (IBBI) has introduced new rules to assist distressed homebuyers by allowing them to take possession of their properties during the resolution process. These measures aim to enhance the efficiency and transparen
IbbiInsolvencyReal EstateHomebuyersResolution ProcessReal EstateFeb 06, 2025
The changes, notified on February 3 and effective immediately, are designed to streamline insolvency proceedings, particularly in the real estate sector.
One of the key changes empowers resolution professionals to hand over possession of plots, apartments, or buildings to homebuyers after obtaining approval from the Committee of Creditors and fulfilling all obligations.
This move is expected to alleviate the long delays often faced by homebuyers awaiting resolution for stalled projects.
Furthermore, the new rules introduce the concept of facilitators for large creditor classes like homebuyers.
These facilitators will act as intermediaries, ensuring seamless communication and clarity in insolvency proceedings.
This is intended to improve homebuyers' participation in the resolution process.
To enhance the viability and feasibility of resolution plans, land authorities such as NOIDA and HUDA can now be invited to meetings of the Committee of Creditors.
This will allow these authorities to provide valuable inputs on regulatory and land development matters, thereby building confidence among homebuyers and stakeholders.
Resolution professionals are now required to submit a comprehensive report within 60 days of the insolvency commencement, detailing the status of development rights, approvals, and permissions for real estate projects.
This will provide greater clarity on project viability, helping creditors make informed decisions more quickly.
The amendments also provide flexibility to the Committee of Creditors to relax certain conditions for associations or groups of homebuyers seeking to submit resolution plans.
This includes eligibility criteria, performance security, and deposits.
This move is aimed at encouraging more homebuyers to participate actively in the resolution process.
Additionally, a monitoring committee will be formed, comprising the resolution professional, representatives of creditors, and the successful resolution applicant.
This committee will be responsible for overseeing the implementation of the resolution plan and will submit quarterly progress reports to the adjudicating authority to ensure accountability and timely execution.
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 of benefits and relaxations for MSMEs under the insolvency code.
These amendments by the IBBI are expected to significantly ease the burden on homebuyers and enhance the efficiency of the insolvency process in the real estate sector.
Frequently Asked Questions
What are the new rules introduced by the IBBI?
The IBBI has introduced rules that allow distressed homebuyers to take possession of their properties during the resolution process, appoint facilitators for better communication, involve land authorities in meetings, and require comprehensive reports on project viability.
Who can now take possession of their properties during the insolvency process?
Distressed homebuyers can now take possession of their plots, apartments, or buildings after obtaining approval from the Committee of Creditors and fulfilling all obligations.
What is the role of facilitators in the resolution process?
Facilitators act as intermediaries between authorized representatives and creditors, ensuring seamless communication and clarity in insolvency proceedings, particularly for large creditor classes like homebuyers.
How will land authorities be involved in the resolution process?
Land authorities such as NOIDA and HUDA can now be invited to meetings of the Committee of Creditors to provide valuable inputs on regulatory and land development matters.
What is the monitoring committee's role in the new rules?
The monitoring committee, comprising the resolution professional, representatives of creditors, and the successful resolution applicant, will oversee the implementation of the resolution plan and submit quarterly progress reports to the adjudicating authority.
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