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Even one homebuyer can now drag errant builder to NCLT: Govt ordinance

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Even one homebuyer can drag an errant builder into the National Company Law Tribunal (NCLT), says the government after an Ordinance promulgated on Wednesday empowered homebuyers to do so.
The Ordinance to amend the Insolvency and Bankruptcy Code (IBC), approved by President Ram Nath Kovind two weeks after it was approved by the Cabinet, puts homebuyers on a par with financial creditors. Homebuyers now will be part of the committee of creditors (CoC) in bankruptcy proceedings. Corporate Affairs Secretary Injeti Srinivas said, “Even if one homebuyer moves the NCLT, the company can go in for insolvency. That is the intention of bringing them into the creditors fold." However, it would be up to CoC to give homebuyers the status of secured or unsecured creditors, he said.
ALSO READ: IBC one-year report card: Recovery rates of bad loans will get worse Most provisions of the Ordinance will be prospective, but the reduced percentage of voting in the CoC to approve a resolution plan will be wi…