NEW DELHI: The resolution rate of the real estate sector under the Insolvency & Bankruptcy Code (IBC) is among the lowest even as it comprises only 5 per cent of all cases under the code, a joint report by property consultant Anarock and leading law firm Khaitan & Co said.
IBC has driven better value realisation by creditors in real estate – with this class of creditors realising 66 per cent of the admitted claims as compared to 31 per cent of admitted claims realised in other sectors. Since the IBC code was implemented in 2016, 25,225 cases involving Rs 10.5 lakh crore have been disposed of.
Top names that are admitted resolution in the sector include Ariisto Developers, Unitech Ltd, Supertech, Radius Estates, Jaypee Infratech, Amrapali Group, Lavasa Corp, and DS Kulkarni. The report said one of the milestones in the evolution of IBC was an amendment which recognises homebuyers as financial creditors.
Under this code, homebuyers are now considered at par with banks and other institutional creditors when it comes to recovering dues from developers who have gone bankrupt. IBC’s framework is designed keeping in mind a resolution timeline of 330 days. However, the time it takes for a resolution plan to be accepted is usually much longer than that. Of the 17 cases, the average time taken to resolve insolvencies stood at 1.8 years.
Kumar Saurabh Singh, partner, of Khaitan & Co, adds, “The insolvency resolution of real estate companies has its own challenges. Due to the involvement of home buyers in real estate projects and a high level of public interest, the courts have adopted a purposive stance to surmount the unique legal issues that emanate from the insolvency resolution of the real estate sector.“