Govt appoints review committee for Insolvency & Bankruptcy Code
The government has appointed a committee headed by corporate affairs secretary I Srinivas to review the Insolvency & Bankruptcy Code (IBC) to address concerns and remove glitches.
The 14-member committee — which includes Insolvency & Bankruptcy Board of India (IBBI) chairman MS Sahoo, representatives from RBI, department of financial services and external experts — has been tasked with assessing the functioning of the new law in addition to examining issues that could impact the framework prescribed under the law that was enacted to speed up revival and exit of firms.
Ramesh Nair, CEO & Country Head, JLL India said, “There is a need for a fine balance here as creditors or primary lenders to the project have advanced a loan to the project under certain considerations where third party rights, as in the case of residential projects are being created. Primacy to homeowners can impair the ability of the lender to find an acceptable exit and is thus a business risk that might be factored in going forward when lending for real estate projects. This has the potential to impact the construction finance and lending market where lenders will have to be extra diligent.”
“A middle of the road solution is needed, though there is no doubt that homebuyers need to be defined as an interested party in insolvency proceedings concerning real estate projects so that their rights are adequately protected,” Nair said.
“In the above context, the review committee’s role assumes great significance in regard to the cognizance of buyer rights that the courts have taken and the government is keen to protect,” he added.