The Union Cabinet on Wednesday cleared amendments to the Insolvency and Bankruptcy Code, incorporating changes suggested by a government-appointed committee, reported PTI.
Minister for Law and Justice Ravi Shankar Prasad said the Cabinet had approved the amendments, however, he refused to disclose any information as it was a new piece of legislation.
When asked if the Cabinet has cleared relief measures for home buyers as per the recommendations of the panel, Prasad said, “There is something called a constitutional protocol. Till it is approved by the president, I cannot speak about the details.”
The report released by the 14-member Insolvency Law Committee recommended that home buyers be treated as financial creditors owing to the unique nature of financing in real estate projects. “Classification as financial creditors would enable home buyers to participate equitably in the insolvency resolution process under the code,” the panel had said in its report. If the recommendation is implemented, it would provide relief for home buyers facing a tough time due to incomplete real estate projects.
The report mentioned that the current definition of “financial debt” is sufficient to include the amounts raised from home buyers/allottees under a real estate project, and hence, they are to be treated as financial creditors under the code.
The committee in April made suggestions to the Ministry of Corporate Affairs, including addressing the situation of home buyers, expanding the pool of potential bidders, making recoveries easier for lenders, and expediting the decision-making process by creditors, according to Bloomberg Quint.