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Last updated: 26 May, 2018  

Housing.9.Thmb.jpg Home buyers to be treated as financial creditors: Minister

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SME Times News Bureau | 26 May, 2018

The Central government on Friday said home buyers would now be treated as financial creditors and would have a share in the proceeds earned by sale of assets of bankrupt real estate companies.

"Good news for home buyers: Now in situation of real estate companies going bankrupt, home buyers will have a share along with banks in the auction of assets of such companies," Finance Minister Piyush Goyal said in a tweet in Hindi.

"This decision will bring relief to lakhs of home buyers in the country," he added.

The Minister’ comment came while an ordinance approved by the Union Cabinet on Wednesday making amendments to the Insolvency and Bankruptcy Code (IBC) was awaiting the President's approval.

Goyal also shared a news article in Hindi about the Cabinet approval to the ordinance.

Under the existing law, the lending bank and other institutional creditors recover their money first through the sale of assets of the builder in case of insolvency. Only if anything is left, do the buyers get their money back.

Classification as financial creditors would enable home buyers to participate equitably in the insolvency resolution process under the Code.

Under the IBC, 'financial creditor' refers to any person to whom a financial debt is owed.

 
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