New Delhi : Home buyers will now be recognised as financial creditors under the insolvency law, with the government promulgating an ordinance.
President Ram Nath Kovind has given his assent to promulgate the Insolvency and Bankruptcy Code (Amendment) Ordinance, 2018, according to an official release.
“The ordinance provides significant relief to home buyers by recognising their status as financial creditors. This would give them due representation in the Committee of Creditors (CoC) and make them an integral part of the decision-making process,” the release said.
Further, home buyers would be able to invoke Section 7 of the IBC against errant developers. Section 7 allows financial creditors to file application seeking insolvency resolution process.
The move also comes at a time when many home buyers are facing hardships on account of delayed and incomplete real estate projects.
According to the release, another major beneficiary would be Micro, Small and Medium Enterprises (MSME) sector as it would get a special dispensation under the Code.