Here's how the latest amendment in insolvency and bankruptcy law will benefit homebuyers

The latest amendment by Insolvency and Bankruptcy Board of India has come as a relief for homebuyers. As per the amendment, if the promoters of a housing project face insolvency and liquidation, homebuyers’ property will be kept out of the process.

Homebuyer's property protected

The amendment has cut the legal wrangle for homebuyers giving them a significant say in the liquidation process. With this change in law, the allottees of a real estate project would have first charges on the property.

“For the purposes of clause (e) of sub-section (4) of section 36, wherever the corporate debtor has given possession to an allottee in a real estate project, such asset shall not form a part of the liquidation estate of the corporate debtor,” an IBBI notification said

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The insolvency regulator through its 12th February notification had introduced 12 key amendments to overall liquidation regulations to streamline the process, bringing in more transparency.

Last year, the insolvency regulator had proposed compulsory registration of all real estate projects undergoing corporate insolvency resolution with the regulator by the insolvency professionals, pushing for increasing the role of RERA.