Tilting power balance towards homebuyers in bankruptcy law is bold and fair

From overburdened tribunals to some bizarre judgments and costly delays, India’s new bankruptcy code has had its share of teething troubles.

But the law, which will decide the fate of $210 billion in bad loans, has also broken new ground. Take the most recent tweak, for instance. Hapless homebuyers left without apartments by debt-stressed builders will have their status raised to that of financial creditors. That’s highly unusual by global standards. It’s a bold innovation, worthy of emulation by other rapidly urbanizing economies.

The change could end up increasing debt financing costs for Indian developers. Banks may charge more for loans if