Letter to BS: NCLT consults Centre, IBBI on Jaypee Infra deadlock

In response to the severe hardships faced by homebuyers due to incomplete real estate projects, the government amended the IBC to recognise homebuyers as financial creditors

This refers to “NCLT consults Centre, IBBI on Jaypee Infra deadlock”. In response to the severe hardships faced by homebuyers due to incomplete real estate projects, the government amended the Insolvency and Bankruptcy Code (IBC) to recognise homebuyers as financial creditors and thereby provided them representation in the Committee of Creditors. Hence, it is disappointing to see the Jaypee Infratech resolution process at a virtual standstill due to the non-participation of home buyers. One solution would be to amend Section 30(4) of the aforesaid Code so as to stipulate that a resolution plan shall be approved by a vote of not less than 66 per cent of voting share of financial creditors actually present in the meeting.
 
Another suggestion is to revisit this threshold of 66 per cent itself. This may be seen in the context of the recent recommendation of Indian Banks Association to the Reserve Bank of India (RBI) on a 90 per cent threshold. The Jaypee Infratech case best illustrates why this recommendation should never be accepted. Earlier this month, the Shipyards Association of India had requested the RBI that the threshold be reduced to 50.1 per cent. This is a valid suggestion which will go a long way in speeding up the resolution process, the prime objective of the IBC.      
                   

S B Bhalerao  Mumbai

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