IBBI Introduces Reforms to Enhance Real Estate Insolvency Processes
Insolvency and Bankruptcy Board of India (IBBI) proposes new reforms to improve the insolvency and bankruptcy framework for real estate projects, addressing critical issues faced by stakeholders such as homebuyers and financial creditors.
IbbiReal EstateInsolvencyBankruptcyReformsReal Estate NewsNov 07, 2024
Key Proposals
Inclusion of Land Authorities in CoC Meetings
Rationale To ensure that land-related issues and regulatory requirements are adequately considered in the resolution process.
Proposal Land authorities will be invited as special invitees to Committee of Creditors (CoC) meetings, but they will not have voting rights.
Addressing Land Allotment Cancellations
Rationale To provide clarity and a structured approach to situations where land allotments are cancelled before the insolvency commencement date.
Proposal Insolvency professionals will be required to report such cancellations to the CoC and the Adjudicating Authority.
Facilitating Allottee Participation
Rationale To empower allottee associations to actively participate in the resolution process.
Proposal The CoC will have the discretion to relax eligibility criteria, earnest money deposit, and performance security requirements for allottee associations.
Clarifying Notional Interest for Homebuyers
Rationale To ensure consistent treatment of notional interest in the calculation of homebuyers’ claims.
Proposal The 8% per annum interest rate will be considered for both voting share calculations and claim valuation.
Appointing Facilitators for Large Creditor Classes
Rationale To improve communication and representation for large creditor classes.
Proposal Facilitators may be appointed to assist in these situations.
Expediting Possession Handover
Rationale To streamline the process of transferring ownership and possession of units to homebuyers.
Proposal Insolvency professionals will be empowered to hand over ownership or possession of units with the approval of the CoC.
These proposed amendments are expected to significantly enhance the efficiency and effectiveness of real estate insolvency resolutions, benefiting all stakeholders involved. By addressing specific pain points and streamlining the process, these reforms aim to promote timely resolution and protect the interests of homebuyers and other creditors.
The Insolvency and Bankruptcy Board of India (IBBI) is a statutory authority established under the Insolvency and Bankruptcy Code, 2016. It is responsible for regulating the insolvency and bankruptcy framework in India, ensuring that the process is fair, transparent, and efficient. The IBBI’s role is crucial in promoting a robust insolvency and bankruptcy ecosystem that protects the interests of all stakeholders.
Frequently Asked Questions
What is the Insolvency and Bankruptcy Board of India (IBBI)?
The Insolvency and Bankruptcy Board of India (IBBI) is a statutory authority established under the Insolvency and Bankruptcy Code, 2016. It is responsible for regulating the insolvency and bankruptcy framework in India, ensuring that the process is fair, transparent, and efficient.
Why are land authorities being included in CoC meetings?
Land authorities are being included as special invitees in CoC meetings to ensure that land-related issues and regulatory requirements are adequately considered in the resolution process, without having voting rights.
What is the purpose of addressing land allotment cancellations?
The purpose of addressing land allotment cancellations is to provide clarity and a structured approach to situations where land allotments are cancelled before the insolvency commencement date. Insolvency professionals will be required to report such cancellations to the CoC and the Adjudicating Authority.
How will the CoC help allottee associations participate in the resolution process?
The CoC will have the discretion to relax eligibility criteria, earnest money deposit, and performance security requirements for allottee associations, empowering them to actively participate in the resolution process.
What changes are being made to notional interest for homebuyers?
The 8% per annum interest rate will be considered for both voting share calculations and claim valuation to ensure consistent treatment of notional interest in the calculation of homebuyers’ claims.
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