IBBI suggests revisions to insolvency resolution procedures

The IBBI has introduced a series of comprehensive proposals to address the complexities encountered in the insolvency resolution process for real estate projects. These measures aim to provide substantial relief to homebuyers who have found themselves ensnared in stagnant real estate developments. The proposals include mandatory project registration with the RERA, the exclusion of properties in the possession of homebuyers from the liquidation process, the establishment of segregated bank accounts for each project, compliance with RERA Act provisions by the Resolution Professional (RP), streamlined handover procedures for units available on an 'as is, where is' basis, and the facilitation of separate resolution plans for specific projects.
To begin, the proposed amendments, currently open for public commentary until November 28, seek to ensure that every real estate project must be registered with RERA or extend its registration if it is due to expire. This move reaffirms the legal and operational authority of RERA in overseeing real estate projects, significantly contributing to the transparency, accountability, and protection of homebuyers' interests. A critical amendment suggests maintaining distinct bank accounts for each project. This practice simplifies the tracking of project progress and the identification of potential issues. Separating receipts and payments for each project enhances the monitoring of financial transactions, which is particularly important in the context of multifaceted real estate ventures.
An essential facet of the proposals is the determination that properties in the possession of allottees cannot be included in the liquidation estate. This protection ensures that homebuyers who have taken possession of their properties are shielded from the consequences of liquidation, emphasizing their rights as homeowners. Moreover, the Resolution Professional (RP) has been entrusted with the responsibility to adhere to the provisions of the RERA Act and its accompanying regulations. Ensuring compliance with RERA provisions is of paramount importance. In circumstances where project registrations have expired or are near expiration, the RP must extend the registration.
This emphasizes the integration of the insolvency resolution process with the existing regulatory framework, offering a seamless and legally compliant transition for real estate projects. The proposals further underscore the imperative of a smooth handover of units available on an 'as is, where is' basis to the rightful homebuyers. Delays and obstructions must be avoided, ensuring that the handover process remains efficient, predictable, and hassle-free for the allottees. In cases where multiple real estate projects are under consideration, the RP is granted the authority to invite separate resolution plans for each project or group of projects belonging to the corporate debtor.
This dynamic approach acknowledges that not all resolution applicants may be interested in every project, often preferring to undertake specific projects that align with their business strategies. These measures collectively address the intricate challenges posed by real estate insolvency resolutions. By integrating the regulatory oversight of RERA, prioritizing the rights of allottees, streamlining financial monitoring through separate bank accounts, and allowing flexibility in resolution planning, the IBBI seeks to foster a more efficient, transparent, and homebuyer-centric insolvency resolution process for real estate projects.

Next (Sai Resort demolition gets court nod, upholding environmental regulations)

IBBI suggests revisions to insolvency resolution procedures

This Month

Overview

Explore

Join Us