Insolvency law must protect homebuyers, avoid complex resolution process

A more effective solution would be to adopt the waterfall mechanism from the FSC framework, which prioritises the interests of customers over those of other claimants

The Insolvency and Bankruptcy Code, 2016 (IBC), much like insolvency law in any jurisdiction, revolves around the debtor-creditor relationship. Simply put, a creditor is someone who has lent money, while a debtor is someone who has borrowed it. When the debtor fails to service its debt, the insolvency process is triggered. What sets the IBC apart is its classification of creditors into two broad types. The first is financial creditors (FCs), such as banks and financial institutions, that have lent money and, in most cases, charge interest on the amounts lent. The second is operational creditors (OCs), who have not