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.
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
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
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
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.