The government on Wednesday cleared amendments to the Insolvency and Bankruptcy Code (IBC), incorporating changes recommended by a government appointed panel. Homebuyers will now be treated as financial creditors or on a par with banks, a move that will give them a say in the resolution process of ailing realty companies.
Even though the amendments through an ordinance will be prospective, it will have a bearing on cases that are already facing insolvency proceedings and the resolution plan is in the works.
Minister for Law and Justice Ravi Shankar Prasad, briefing reporters after the Cabinet meet said, "I cannot disclose anything because it's a new legislation except to reinforce that the Cabinet has approved it".
Asked if the Cabinet has cleared some relief measures for home buyers as per the recommendations of the panel, Prasad said, "there is something called constitutional protocol. An Ordinance till it is approved by the President, I cannot speak about the details".
A 14-member Insolvency Law Committee had made suggestions to the Ministry of Corporate Affairs, including addressing woes of home buyers and making recoveries easier for lenders.
The panel had suggested that home buyers should be treated as financial creditors, which will allow them to participate in an insolvency resolution process on a par with the banks.
The panel has also suggested relaxations for Micro, Small and Medium Enterprises(MSMEs) under the IBC.