NEW DELHI: In yet another set of likely changes in rules related to real estate insolvency, the regulator has proposed including land authorities in the Committee of Creditors (CoC) without giving them voting rights. The regulator also proposes an amendment in the law to make it clear that claims of homebuyers must include 8% interest per annum.
Currently, the CoC primarily comprises financial creditors, which often leads to a disconnect regarding land-related regulatory issues, potentially complicating resolution plans.
In a bid to streamline insolvency proceedings in real estate sector, the Insolvency and Bankruptcy Board of India (IBBI) has proposed several recommendations to the rules on real estate insolvency process.
This recommendation, outlined in a recently released discussion paper, seeks to address the critical role that land authorities play but currently lack adequate representation in the corporate insolvency resolution process (CIRP) involving real estate companies.
The IBBI’s initiative comes in response to recommendations from a study group formed by the Indian Institute of Insolvency Professionals of ICAI (IIIPI), which emphasised the necessity of incorporating land authorities into the decision-making framework.
IBBI’s proposed measures include allowing resolution professionals to transfer ownership of plots, apartments, or buildings directly to allottees during resolution process, pending approval from the CoC. The discussion paper advocates for the appointment of facilitators to represent large classes of creditors, thereby improving communication and ensuring that their interests are adequately represented.
In a bid to keep allottees informed about the status of their projects, IBBI has proposed granting them access to the minutes of CoC meetings related to real estate insolvencies.
Proposes allowing transfer of plot ownerships
The Insolvency and Bankruptcy Board of India’s proposed measures include allowing resolution professionals to transfer ownership of plots, apartments, or buildings directly to allottees during resolution process, pending approval from the Committee of Creditors (CoC)