The IBBI has recently released out a Discussion Paper which deals with issues faced during insolvency process of real-estate projects. The issues were deliberated upon in the Amitabh Kant’s Committee Report on Real-Estate projects, wherein the committee recommended that “the IBC needs to be reformed to better accommodate the complexities of the real estate sector.”
Some of the recommendations of the Committee are as under:
A. It is proposed to mandate the IRP / RP to register all real estate projects under RERA or to extend the registration of the real estate project under RERA, wherein the registration is expired or about to expire. The registration of the Real Estate Project is essential for ensuring a more transparent, accountable, and efficient process.
B. In line with the RERA provision for maintaining separate accounts to maintain systematic record-keeping for each project and to ensure transparency in the process, it is proposed that IRP / RP should operate a separate bank account for each project undergoing CIRP.
C. To facilitate the smooth handover of occupied units or where possession has been transferred to home buyers, it is proposed to allow RP to handover the ownership of a plot, apartment, or building to the allottees through transfer during the resolution process, with the approval of CoC.
D. CoC to examine and invite separate plans for each real estate project. It is also proposed to exclude the property in possession of homebuyers from the liquidation estate as per section 36(4)(e), which provides that assets in possession of the allottee be excluded from the liquidation estate.
The public may send their comments on the amendments proposed by Insolvency And Bankruptcy Board Of India by November 28, 2023 in the prescribed format.
A copy of the IBBI Discussion Paper seeking suggestions is enclosed below.
Readers are welcome to share their views with Regstreet Law Advisors at info@regstreetlaw.com