President Ram Nath Kovind on Wednesday approved the promulgation of the Insolvency and Bankruptcy Code (Amendment) Ordinance, 2018. The amendments recognise home buyers as financial creditors, bringing them on par with banks. “This would give them due representation in the Committee of Creditors and make them an integral part of the decision making process,” a press release said.
Further, home buyers would be able to invoke Section 7 of the code against developers. The section allows creditors to file an application seeking insolvency resolution proceedings, PTI said.
The Cabinet had cleared amendments to the code last month, incorporating changes suggested by a government-appointed committee. At the time, Minister for Law and Justice Ravi Shankar Prasad refused to disclose whether the Cabinet had cleared relief measures for home buyers as per the recommendations of the panel.
The Insolvency and Bankruptcy Code provides for a robust legal framework to resolve insolvency cases and release non-performing assets quickly.
A report released by the 14-member Insolvency Law Committee in April had recommended that home buyers be treated as financial creditors owing to the unique nature of financing in real estate projects.