According to the IBC bill, pending applications from home buyers against developers not accepted will meet the new conditions within 30 days of the Act being passed.
NEW DELHI: The accreditation of home buyers ‘ financial creditors is now followed by runners. Home buyers, willing to take the developer to an insolvency court, are now expected to ensure that at least 100 home buyers or 10% of the overall home purchasers file against the developer for bankruptcies.
On Thursday, the Government tabled the 2019 Insolvency and Bankruptcy Code (Second Amendment) Bill on the Lok Sabha that also provides for the safeguarding of buyers against previous promoters of a bankrupt company, including the amendments.
“An application shall be filed jointly by not less than 100 of such creditors in the same class or not less than 10% of the total number of such creditors, whichever less than, “said the bill, referring to the home buyers class.
“Moreover, a request for the initiation of a corporate insolvency resolution process shall be filed jointly by not less than 100 of those allotted under the same real estate project for financial creditors who are allotted under a real estate project or not less than 10% of the total number of those allotted under the same real estate project, whichever is less.”
According to the bill, if the application is found to have been withdrawn prior to acceptance, all pending applications by home buyers against developers that have not been accepted will have to meet the new conditions within 30 days of the bill’s launch.
The insolvent corporations will now be able to file insolvency against another corporate debtor in another interesting development. This will allow insolvency promoters to launch similar proceedings against any individual that may or may not have been responsible for its current state.
The protection against criminal proceedings against prospective purchasers of a bankrupt company being prosecuted is another major move.
This decision will impact on cases like the Bhushan Power and Steel insolvency procedure, which has made JSW Steel the effective bidder but has stopped its transaction with the NCLAT (National Company Law Appellate Tribunal), following the attachment of the assets of the bankrupt BPSL by the Enforcement Directorate (ED).
It clarified that no action shall be taken against the corporate debtor’s property in respect of an offens committed prior to the beginning of the corporate debtor’s corporate insolvency resolution process where such property is protected by a resolution plan authorized by the Adjudicating Authority pursuant to section 31, resulting in a reduction in the corporate debtor’s control to one percent.
The bill also makes it clear that a license, permit, registration, cap, concession, approval or equivalent grant or right can not be revoked or suspended during a company’s suspension period or as long as the insolvency process continues.