Government plans ordinance to empower home buyers

NEW DELHI: The government is set to amend the Insolvency & Bankruptcy Code (IBC) to give home buyers the status of financial creditors and enable to participate them in proceedings in the way banks do, as part of the latest set of measures to address concerns related to the over one-year-old law.
Sources said the cabinet will recommend the promulgation of an ordinance by the President, although the issue was not on the agenda circulated to ministers on Tuesday.
The new treatment to home buyers, which follows from observations made by the Supreme Court in cases related to Jaypee Infratech and Amrapali, will provide comfort to a very important section, which parks its lifetime savings into housing projects, many of which are running nearly a decade behind schedule as builders have run out of money.
The amendments follow recommendations made by a committee headed by corporate affairs secretary Injeti Srinivas. The proposed amendments are also expected to address the concerns of small businessmen as the ban on promoters from bidding during the resolution process is severely impacting SMEs.
Further, to address the problem of unintended exclusions under section 29A of IBC, which disqualifies certain persons from submitting resolution plans, the committee had recommended that only those, who contributed to loan repayment defaults by the company or are seen to be undesirable, are ineligible. The move is also meant to ensure that there is a larger pool of investors available to take over ailing projects.