IBC: Real Estate may lose funding

By Accommodation Times Bureau

A recent high-level panel suggestion said the government that home buyers should be treated as financial creditors which allow them to equitably participate in an insolvency resolution process.  The 14-member panel was headed by headed by Corporate Affairs Ministry, has also suggested relaxations for Micro, Small and Medium Enterprises (MSMEs) under the Insolvency and Bankruptcy Code.

However, it seems that it would affect the real estate sector. According to the source that did not wish to name he said, the recommendations are good at some level but, the panel needs to think beyond that which means that at macro-level, there should be some neutrality in nature.

Sharing the table with the home buyer may lead to stopping lender to fund the real estate projects because he (lender) know that at the time of insolvency the buyers will be uncontrollable, it added.

According to the detailed report, the panel has recommended that home buyers should be treated as financial creditors owing to the unique nature of financing in real estate projects and the treatment of home buyers by the Supreme Court in ongoing cases.

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