Status of Home buyers after New Amendments in IBC Code
The Union Cabinet approved through an Ordinance various amendments to the Insolvency and Bankruptcy Code (IBC), according homebuyers the status of creditors in the insolvency process. In a major welcome change, homebuyers would now be treated as financial creditors or, in other words, on par with banks. The amendment enables homebuyers (be it either an individual or a group) to initiate insolvency proceedings against defaulting builders. Homebuyers shall have the right to be represented in the committee of creditors (CoC), which takes the key decision regarding revival of the company or its liquidation. According to experts, the amended law will benefit homebuyers only at the resolution stage so they should try to turn around the company instead of getting it liquidated.
Under the Insolvency and Bankruptcy Code Amendment Ordinance, 2018, home buyers will get due representation in the committee of creditors (CoC) that takes a call on resolution proposals, making them an integral part of the decision making process. Homebuyers would be able to invoke the provisions of Section 7 of the IBC against resolution process though this amendment which would be immensely assist the home buyer against the errant builders.