The rights of home buyers and depositors have increased. Now they can nominate their representative in the bankruptcy process of the realty company. They have to nominate their representative from the panel of three insolvency professionals. The nominate Insolvency Professional will represent the home buyers in the Committee of Creditors (COC). The COC decides home buyers fate when the real estate company drowns. Insolvency and Bankruptcy Code (IBC) has been amended to give the home buyer the right to nominate an insolvency representative in the bankruptcy process. This action has been taken after action against realty companies like JP Infratech and Amrapali.
After amendments to the Insolvency and Bankruptcy Code (IBC), home buyers will also get a chance to represent themselves in the COC. Earlier, it was feared that only the involvement of the lenders (banks) in the CoC could be neglected by the interests of other parties, including home buyers.
According to the new rules of the Insolvency and Bankruptcy Board of India (IBBI), in the case of a housing company, every category of creditors will get an opportunity to nominate their representative in the COC. Depositors, security holders and home buyers come in this category.
The changes in the rules have been made after seeing some recent cases. In some high profile cases, the settlement of the case was significantly delayed. After this, the government advised to create comprehensive rules on the lines of the Companies Act. Its purpose is to ensure the interest of each party in the COC. The rules have also been set for the time limit in each of the rules. There is a provision to complete the entire response in 180 days.
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