The government has taken another major step towards ensuring the welfare of home buyers. People who have booked apartments with Jaypee Infratech might not have to fill up forms to protect their interests in bankruptcy proceedings. The government is planning to introduce a new category called ‘Clients’ with rights in insolvency proceedings.
This move has come in the light of recent events when real estate companies such as Jaypee Infratech are being dragged into insolvency proceedings by their creditors since creditors get the money first in insolvency cases. This consequently set in a fear among people who had booked flats that their investment may be wiped out.
The banks have safeguarded their interests by using the Insolvency & Bankruptcy Code, 2016. Under this Act, the lenders can move an application in courts to seize assets of the company to settle their loans. But home buyers stand at a lower pedestal as they cannot be termed as lenders. Acknowledging such a problem, the government has been working on amendments to include home buyers in the definition of lenders as ‘clients’ thereby protecting their interests. Even if a buyer fails to fill the requisite forms under the Insolvency Code, his interests would still be protected.
Anuj Jain, an insolvency professional, will be collecting the details of buyers from the registers of the real estate companies. It is believed that around 32,000 buyers have been affected by the Jaypee case.
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