President approves ordinance to treat home buyers as creditors

Source: The Hitavada      Date: 07 Jun 2018 09:28:46


 

NEW DELHI,

Being treated as financial creditors would bring home buyers at par with banks and other institutional creditors as they would now have a share in the proceeds earned by sale of assets of bankrupt real estate companies

GIVING significant relief to home buyers, President Ram Nath Kovind on Wednesday gave assent to the ordinance amending the Insolvency and Bankruptcy Code (IBC) to
recognise their status as financial creditors.
Being treated as financial creditors would bring home buyers at par with banks and other institutional creditors as they would now have a share in the proceeds earned by sale of assets of bankrupt real estate companies.


“The President on Wednesday gave assent to promulgate the Insolvency and Bankruptcy Code (Amendment) Ordinance, 2018,” an official statement said.
The Government said the ordinance would give home buyers due representation in the Committee of Creditors and make them an integral part of the decision making process.


The Union Cabinet last month approved ordinance and Finance Minister Piyush Goyal had said the decision will bring relief to lakhs of home buyers in the country.
“Good news for home buyers: Now in situation of real estate companies going bankrupt, home buyers will have a share along with banks in the auction of assets of such companies,” he had tweeted.


The Finance Ministry said the ordinance would also benefit Micro, Small and Medium Sector Enterprises (MSME) by empowering the government to provide them with a special dispensation under the Code.


“The immediate benefit it provides is that it does not disqualify the promoter to bid for his enterprise undergoing Corporate Insolvency Resolution Process (CIRP) provided he is not a willful defaulter and does not attract other disqualifications not related to default,” the Finance Ministry statement said.


“It also empowers the Central Government to allow further exemptions or modifications with respect to the MSME sector, if required, in public interest,” it added.
Under the new ordinance, with a view to encourage resolution as opposed to liquidation, the voting threshold has been brought down to 66 per cent from 75 per cent for all major decisions.