According to the most recent regulation change made by the Insolvency and Bankruptcy Board of India (IBBI), homebuyers' property will remain out of the process if the promoters of a housing project face insolvency and liquidation. With this adjustment, homebuyers will have less legal wrangling and more influence over the liquidation process.
IBBI stated, "Where the corporate debtor has given possession to an allottee in a real estate project, such asset shall not form a part of the corporate debtor's liquidation estate for the purposes of clause (e) of sub-section (4) of section 36.”
The insolvency regulator had last year pushed for an increased role of RERA by proposing compulsory registration of all real estate projects undergoing corporate insolvency resolution with the regulator by the insolvency professionals.
After this, first charges on the property would go to the real estate project allottees. "The IBC needs to be reformed to better accommodate the complexities of the real estate sector," according to the Amitabh Kant committee report on real estate projects.
The IBBI streamlined the process and increased transparency by introducing 12 significant changes to the overall liquidation laws through its notification on February 12.
