INSUBCONTINENT EXCLUSIVE:
Now, home buyers would be able to invoke Section 7 of the IBC against errant developersNew Delhi: Home buyers will now be recognised as
financial creditors under the insolvency law, with the government promulgating an ordinance
President Ram Nath Kovind has given his assent to promulgate the Insolvency and Bankruptcy Code (Amendment) Ordinance, 2018, according to an
"The ordinance provides significant relief to home buyers by recognising their status as financial creditors
This would give them due representation in the Committee of Creditors (CoC) and make them an integral part of the decision-making process,"
beneficiary would be Micro, Small and Medium Enterprises (MSME) sector as it would get a special dispensation under the Code
"The immediate benefit it provides is that, it does not disqualify the promoter to bid for his enterprise undergoing Corporate Insolvency
also empowers the central government to allow further exemptions or modifications with respect to MSME sector, if required, in public
On May 23, the Cabinet had cleared promulgation of an ordinance to amend the IBC
The ordinance also lays down a strict procedure for withdrawal of a case by an applicant after admission under the Code
will only be permissible before publication of notice inviting Expressions of Interest (EoI)," the release said
According to the release, the regulations would bring in further clarity by laying down mandatory timelines, processes and procedures for
"Some of the specific issues that would be addressed include non-entertainment of late bids, no negotiation with the late bidders and a well
voting threshold for approval has been reduced to 66 per cent from 75 per cent for all major decisions such as approval of resolution plan
threshold for routine decisions has been reduced to 51 per cent
Besides, the ordinance provides for a mechanism to allow participation of security holders, deposit holders and all other classes of
financial creditors beyond a certain number to attend the CoC meetings through authorised representations
"Taking into account the wide range of disqualifications contained in Section 29(A) of the Code, the ordinance provides that the resolution
applicant shall submit an affidavit certifying its eligibility to bid
financial entities would be exempt under the provision from being disqualified on account of Non Performing Assets (NPA)
"Similarly, a resolution applicant holding an NPA by virtue of acquiring it in the past under the IBC, 2016, has been provided with a
three-year cooling-off period, from the date of such acquisition
successful resolution applicant would have at least one-year grace period to fulfill various statutory obligations required under different
Other changes in the Code include non-applicability of moratorium period to enforcement of guarantee and liberalising conditions of interim
finance for corporate debtor during resolution period
Further, the requirement of special resolution for corporate debtors to trigger insolvency resolution on their own has been introduced, as
per the release.The Insolvency and Bankruptcy Board of India (IBBI) would have a specific development role along with powers to levy fee in
respect of services rendered, the release said.(Except for the headline, this story has not been edited by TheIndianSubcontinent staff and
is published from a syndicated feed.)
