On Wednesday, amendments to the Insolvency and Bankruptcy Code have been given approval by the Union Cabinet to thus treat homebuyers as financial creditors at par with banks and other institutional creditors for recovering dues from real estate firms that have turned bankrupt.
It is to be noted that some of the real estate companies are going through insolvency proceedings and as the current rules do not lend any support to home buyers who have put money into such firms, there was proposed amendment in the laws of IBC. The amendments reportedly being cleared came in after high-level panel proposed that homebuyer's be allowed to participate in the insolvency proceedings of such real estate firms equitably.
As per the present provisions of the IBC, home buyers are unsecured creditors who are placed in the order of priority after secured or institutional creditors.
The proposed amendments provide exemptions to micro small and medium enterprises under Section 29A of the IBC that restricts willful defaulters, promoters as well as associated individuals from the process.