Promulgation of IBC ordinance to empower home buyers

Ministry of Corporate Affairs Secretary Injeti Srinivas opined that with the promulgation of the Insolvency and Bankruptcy Code (Amendment) Ordinance, 2018, home buyers will now be given the status of financial creditors.

"Home buyers will be recognised as financial creditors now and will be a part of the decision-making process. Their voting share will increase as per their exposure and bargaining power will increase," Srinivas told ANI.

He further informed that section 29 (A), inserted in the Code to debar defaulting promoters and related parties, would now be relaxed for financial creditors.

Earlier in the day, President Ram Nath Kovind gave his assent to promulgate the Insolvency and Bankruptcy Code (Amendment) Ordinance, providing significant relief to home buyers by recognising their status as financial creditors.

It will also enable home buyers to invoke Section 7 of the Insolvency and Bankruptcy Code (IBC), 2016 against errant developers.

The immediate benefit it provides is that it does not disqualify the promoter to bid for his enterprise undergoing the Corporate Insolvency Resolution Process (CIRP) provided the person is not a willful defaulter and does not attract other disqualifications.