insolvency regulator IBBI have come up with a number of proposals to improve real estate resolutions under the IBC, such as mandating the participation of land authorities in Committee of Creditors (CoC) meetings in cases involving real estate companies.
A discussion paper issued by the Insolvency and Bankruptcy Board of India (IBBI) on Thursday for this purpose aims to enhance the efficiency and effectiveness of real estate insolvency proceedings under the Insolvency and Bankruptcy Code (IBC). IBBI said interested parties have until November 27 to electronically submit their comments on the seven proposals and draft amendments to the CIRP regulations.
Land authorities play an important role in Corporate Insolvency Resolution Processes (CIRP) involving real estate companies, but currently lack mandatory representation in CoCs.
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Currently, financial creditors are included in the CoC, but land authorities, which are generally operational creditors, are not included. This lack may result in inadequate consideration of land authorities’ views on land-related issues and regulatory requirements, and unforeseen issues may cause delays and complications in the implementation of resolution plans.
Furthermore, valuable input from land authorities that could enhance the feasibility and feasibility of resolution plans is often overlooked, reducing coordination between insolvency proceedings and land-related issues. “Given the importance of land assets in real estate projects and the associated regulatory compliance, there is a need to ensure that land authorities have a formal channel to provide input during the CIRP, while preserving the decision-making authority of financial creditors. “It’s clear that there is,” he said. discussion paper.
competent authority
IBBI therefore proposed to include non-voting competent authorities (including land ownership authorities) as invitees to CoC meetings in cases involving real estate companies.
The proposed changes address key issues in the regulatory framework by providing competent authorities, including land ownership authorities, with an opportunity to provide input and raise concerns during the CIRP, while retaining the CoC’s decision-making powers. It deals with.
From a stakeholder perspective, the presence of such competent authorities at CoC meetings can improve transparency and build confidence in the resolution process among homebuyers and other stakeholders. Masu.
critical player
Siddharth Srivastava, partner at Khaitan & Co, said: “While all the changes proposed in the discussion paper will benefit stakeholders, in my opinion the most important proposals are without) in the CoC.” He said land authorities had a key role in making the resolution a success and needed to be aware of the contours of the resolution plan and CIRP and provide input to ensure future compliance.
“This is also likely to address implementation issues faced by successful bidders due to lack of cooperation from land authorities for processing claims,” Srivastava added.
Hari Hala Mishra, CEO, ARC Association of India, said the latest IBBI newsletter for June 2024 rightly highlights the ‘revival of real estate’ in its editorial. “This discussion paper attempts to close all operational bottlenecks in real estate regeneration by involving all stakeholders and removing information asymmetries between them. CoC meeting For the first time, the measures are aimed at improving the resolution outcomes of real estate projects and protecting the interests of homebuyers. .
7 important suggestions:
• Involve land authorities in CoC meetings.
• Dealing with canceled land allocations due to real estate bankruptcies.
• Empower the CoC and allow assigned organizations to participate as resolution applicants.
• Clarify that homebuyers’ CIRP claims include interest.
• Facilitate representation of large creditors through appointed facilitators;
• Share CoC meeting minutes with all creditors of a class of real estate projects.
• Streamline ownership handover in real estate projects.
