Central Government Declares Home Buyers To Be Treated As Financial Creditors

न्यूज़ वर्ल्ड इंडिया | 0
| May 26 , 2018 , 18:32 IST

The central government on Friday declared that home buyers will now get the share in the proceeds earned by the sale of assets of bankrupt real estate companies as from now they will be treated as the financial creditors.  The home buyers got a huge relief by the decision of the central government.

As Finance Minister Piyush Goyal said in a tweet in Hindi “ Good news for home buyers: Now in situation of real estate companies going bankrupt, home buyers will have a share along with banks in the auction of assets of such companies," He added “This decision will bring relief to lakhs of home buyers in the country."

Along with his tweet, Goyal shared a news article in Hindi about the Cabinet approval to the ordinance.

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Home buyers should be treated as financial creditors so that they can participate equitably in an insolvency resolution process –this was suggested by the Insolvency Law Committee (ILC) which was set up earlier by the Corporate Affairs Ministry. The committee consists of the 14 members and was headed by Corporate Affairs Secretary Injeti Srinivas.

The committee also suggested relaxations for micro, small and medium Enterprises (MSMEs) under the IBC which came into force in December 2016.

Recommending relief for home buyers stranded due to real estate projects left incomplete by promoters facing insolvency proceedings, the panel suggested home buyers be treated as financial creditors owing to the unique nature of real estate financing and their treatment by the Supreme Court in ongoing cases.

Notably, classification as financial creditors would enable home buyers to participate equitably in the insolvency resolution process under the Code. Under the IBC, 'financial creditor' refers to any person to whom a financial debt is owed.